Select Committees: Barnett Formula

Lord Barnett: asked the Leader of the House:
	Whether she will support a proposal to the Liaison Committee for the appointment of a Select Committee on a review of the Barnett formula.

Baroness Ashton of Upholland: My Lords, it is my role, as a member of the Liaison Committee, to consider carefully all such proposals, along with the other members of the committee. If my noble friend Lord Barnett decides to submit a proposal to the committee in the next Session, I would of course welcome the opportunity to give it full consideration.

Lord Barnett: My Lords, I note what my noble friend has said, but she has not been a member of the Liaison Committee for very long. I hope that she is aware that the Chairman of Committees has replied already to my request, indicating that, although he could not agree to an ad hoc committee this Session, because one has already been appointed, he will accept an application from me in the next Session. I can tell my noble friend that I will apply.
	My noble friend will be aware that recently I quoted the latest Treasury figures, which showed that expenditure per head is £1,500 less in England than in Scotland. Clearly, that is unacceptable. However, as both major parties are opposed to change, I am asking only for support for a review, which I am sure she will accept. Is she aware that she has a unique opportunity—indeed, the House of Lords has a unique opportunity—to review this whole question by agreeing to set up an ad hoc Select Committee, especially as the Government, following yesterday's important announcement, now agree to a great deal more parliamentary democracy? Now that she is a member of the Liaison Committee, will she give me an assurance that she will not oppose but support my request? She will note that I put my Question not to the Government, but to her personally, although I did not know at the time that she would be a member of the committee.

Baroness Ashton of Upholland: My Lords, one thing that I have learnt in the past few days is how many unique opportunities I have apparently been given, as noble Lords have been keen to point out. Indeed, as my noble friend knows, I have been a member of the Liaison Committee, with which I have not yet met, for only a few days. I will consider very carefully what is put before it. I have seen the correspondence and I completely understand that a new ad hoc committee has just been set up. I will consider the matter carefully, but my noble friend must understand that I cannot make a commitment at this point.

Lord Forsyth of Drumlean: My Lords, if the noble Lord's proposal does not find support among unionists on all sides of this House, it will clearly be untenable for Scotland to continue to receive more expenditure per head while implementing policies such as having free tuition fees for Scottish students when English students have to pay, allowing Lucentis, which prevents blindness, to be prescribed on the NHS in Scotland but not in the UK, and having free care for the elderly north of the Border. I accept that the Scottish Parliament is entitled to take these decisions, but it has to do so in the context of a funding system that is seen to be fair to all parts of the United Kingdom.

Baroness Ashton of Upholland: My Lords, the noble Lord makes powerful remarks and I am well aware of his knowledge of Scotland. I am sure that the views of your Lordships' House, not least those expressed in our discussions today, will be taken into account by the Liaison Committee when making its decisions.

Lord McNally: My Lords, has it not for a long time been the policy of all political parties to try to make sure that resources are spread throughout our United Kingdom? Therefore, it is a little dangerous to play the politics of resentment by suggesting that one region or one part should get this or that much money, as we are seeing happen again in London's politics. It is important to look at this in terms of ensuring proper levels of aid and development throughout the regions and nations of our United Kingdom, while making sure that, at the local level, there is an opportunity to raise taxes and spend them.

Baroness Ashton of Upholland: My Lords, a whole range of taxation issues emerges from the noble Lord. We believe that the Barnett formula has served us well, but it is reasonable and understandable that from time to time representations are made about whether it should be reviewed. They are made from different viewpoints; that is probably why the formula has lasted so well and been so successful. As my noble friend Lord Barnett knows, if the committee believes that this is an interesting and worthwhile project, it will consider it properly.

Lord MacGregor of Pulham Market: My Lords—

Lord Strathclyde: My Lords, is not the key to this to look at not just expenditure but also the amount of tax raised in different parts of the United Kingdom, including the different regions in England? That would neutralise the separatist forces that now exist in parts of the United Kingdom, which have largely been brought about by the Scottish Parliament.

Baroness Ashton of Upholland: My Lords, as I said yesterday in our discussions of the Statement, we believe very strongly in the union. It is a very important part of the way in which we wish to be governed and it is important in terms of what we do in this country and our relations with Scotland, Wales and Northern Ireland. All these matters will be discussed in your Lordships' House on many occasions. On the question about the Liaison Committee, I say again that that depends on the work that the committee wishes to do, having taken account of the views of your Lordships' House.

Lord Sheldon: My Lords, is my noble friend aware that, when the formula was introduced in 1974, it was accepted that it would last for only a year or two? It is only subsequent Governments who have failed to realise the importance of that and to adjust it in the light of circumstances.

Baroness Ashton of Upholland: My Lords, it is interesting that many things that have been brought in for a year or two survive the course. We believe that the arrangement will survive the course and have no plans to review it.

Lord Mackie of Benshie: My Lords, does the Minister agree that the larger the number involved, the cheaper it is to administer? The 50 million people in England cost much less per head than the 5 million in Scotland because of the numbers involved. Scotland has an enormous area of moorland and so on, which involves much more expense. Furthermore, Scotland produces a lot of doctors who work in England.

Baroness Ashton of Upholland: My Lords, needs assessment is one of the issues involved and, within the formula, it is for the Scottish Executive, the Northern Ireland Executive and the Welsh Assembly to consider needs. That will include where the population is, the sparsity of population and where resources need to be placed. It is appropriate for them to do that.

Baroness Miller of Hendon: My Lords, does the Minister agree that the needs of patients in England who require medication but who are refused by the NHS are just as great as the needs of patients in Scotland, who seem to get their medication quite easily? I ask that because the right honourable Member for Paisley and Renfrewshire South, when he was trying to describe the difference in money given per capita in England and Scotland, said:
	"Taxes should be levied according to ability to pay, and assets should be distributed according to need".
	Do not patients need certain things?

Baroness Ashton of Upholland: My Lords, I pay tribute to the work of the National Institute for Health and Clinical Excellence, which has done a fantastic job making sure that we are able to provide the right quality and quantity of medication and supply. We should all support its work.

Schools: Boys' GCSE Results

Lord Northbourne: asked Her Majesty's Government:
	Whether they have any plans to improve the academic performance of boys at GCSE.

Lord Adonis: My Lords, boys' GCSE performance has improved, but the gender gap has remained 10 percentage points since the 1980s. This differential begins in primary schools. Literacy has been, and continues to be, our priority. The revised literacy strategy promotes best practice in synthetic phonics teaching, and other initiatives, including "Boys into Books", are encouraging boys to read for pleasure. A wider secondary school curriculum, including new work-related diplomas and an expansion of apprenticeships, is also essential.

Lord Northbourne: My Lords, I am most grateful to the noble Lord for those figures, which I was going to quote but now do not need to. They must be very disappointing to all of us who believe in equal opportunities. Even in the limited sphere of employment, good GCSEs lead to better jobs. There are many disadvantages for those who do not achieve in the academic world. Could the noble Lord outline the principal factors that the Government see as causal in this extraordinarily unsatisfactory situation?

Lord Adonis: My Lords, of course the situation is disappointing; the noble Lord is completely right about that. However, I would note that differential performance in literacy between boys and girls is a common international pattern. The international OECD PISA study showed that girls have significantly better reading scores than boys in all participating countries except Lichtenstein, apparently. The gap in England is statistically significant but smaller than the OECD average. We are dealing here with international forces.
	We think that the main cause is differential performance in literacy between boys and girls in primary school, particularly in the acquisition of effective writing skills which are essential to access a curriculum thereafter. That is why we have given primacy to improving literacy in primary schools—not only in the teaching of early reading under the Rose review and in the emphasis on synthetic phonics and programmes for teachers to use which give primacy to it, but in catch-up schemes for pupils who are falling behind, including the Every Child a Reader scheme which ensures small-group or individual tuition for children who are falling behind at the end of their first or second year of primary school. The early research work on Every Child a Reader has been hugely positive and children have made substantial gains from that one-to-one or small-group tuition in a very short period. The Government intend to invest more in it so that fewer boys in particular start falling behind in reading skills from the earliest years of primary school.

Baroness Morris of Bolton: My Lords, I start by saying how pleased we are to see the Minister back in his place. His knowledge and passion for education are widely acknowledged, and so we were delighted when rumours of the headmaster of Grange Hill being given a peerage proved unfounded.
	The marked gender gap in the educational attainment of boys and girls is a worrying feature and getting worse. Can the Minister say whether any consideration has been given to the recommendation of the chief inspector of Ofsted, Christine Gilbert, that boys should be taught separately to stop them falling further behind?

Lord Adonis: My Lords, I thank the noble Baroness for her very kind remarks—and may I say how pleased I am to see her in her place as well? Indeed, fewer people appear to have returned to their place on the opposition Front Bench in another place than have returned to their places on our side. Her survival is a remarkable tribute to the strength of her own convictions and the success with which she has shadowed me in this House.
	The noble Baroness is right that there are a number of different options in teaching techniques for boys and girls. Separate teaching up to particularly GCSE level is one that is favoured by many and is being taken forward in many schools. There is not a single tried-and-tested model that is shown to be universally successful, so we think that these decisions are best devolved. However, we are certainly not standing in the way of the piloting of new models of single-sex teaching within what are otherwise mixed schools, particularly in the earlier secondary years when the progress of boys tends to slip behind.

Baroness Walmsley: My Lords, is the Minister aware that I have not been placed yet?
	The Minister is right to concentrate on literacy, and of course boys very often lag behind girls. However, does he accept that the national literacy scheme, welcome though it is, leaves some students behind, and that the reading recovery programme and other initiatives he mentioned are very expensive, because they are one-to-one? Will the Government now do some research on the excellent computer-based diagnostic literacy programmes which are available regarding their effectiveness in helping children who for one reason or another are not learning to read and getting their reading up to the level required to really benefit from the materials that are put before them when they go to secondary school?

Lord Adonis: My Lords, first, may I first say how devastated I am that the noble Baroness has not joined us on this side along with many of her noble friends? There are many more advisory posts that we could create. Indeed, I sense that she could fill one very well on the use of computer techniques in the teaching of literacy. I shall take her comments very closely to heart and see that we do the assessment that she called for.

Baroness Massey of Darwen: My Lords, I appreciate my noble friend's comments about literacy strategies and how important and effective they are, but has he taken account of other research that shows, for example, that sporting activities in schools improve the performance of both boys and girls from an early age?

Lord Adonis: My Lords, my noble friend is absolutely right about the importance of physical activity and a wider curriculum in schools. Her personal contribution in the field of cricket is well known. We are seeking to extend sporting opportunities more widely in schools, starting in primary schools. I pay tribute, for example, to A Chance to Shine, the cricket initiative with which my noble friend has been associated. We want to see a significant extension of sporting opportunities for children of all ages in our schools.

The Earl of Listowel: My Lords, is the Minister considering encouraging Afro-Caribbean professional men to act as mentors for Afro-Caribbean boys—to read with them, assist them with their learning and take them to their places of employment?

Lord Adonis: My Lords, the noble Earl is quite right about the importance of mentors and role models, and that extends throughout the teaching profession too. We are seeking to encourage a significant increase in the number of teachers recruited from among able graduates in the ethnic minorities, not just as teachers but as school leaders as well. For example, we have a scheme called Investing in Diversity which identifies able school leaders from the black, African and Caribbean communities and encourages them to come forward for school leadership positions. It is based at the Institute of Education at the University of London. It has been a highly successful programme and is promoting a significant expansion in the number of very able school leaders coming forward from among the ethnic minorities.

Schools: Grammar Schools

Baroness Massey of Darwen: asked Her Majesty's Government:
	Whether they have any plans to increase the number of grammar schools in England.

Lord Adonis: My Lords, no.

Baroness Massey of Darwen: My Lords, I thank my noble friend for that comprehensive reply. Does he agree that the purpose of any school is to improve achievement and to foster love of learning across a whole range of skills, attitudes and values? Can he say precisely what programmes and strategies are in place to encourage learning and improve achievement?

Lord Adonis: My Lords, my noble friend the Leader of the House is encouraging us to be increasingly brief, so I followed suit with my Answer. A whole range of programmes are in place to improve the quality of teaching and learning, but I would start with the teachers themselves. We will achieve nothing in education without good quality teachers. Over the past 10 years, we have significantly improved the average pay of teachers and head teachers. We have invested more in their training, establishing a National College for School Leadership. We have particularly concentrated on recruiting teachers in areas such as mathematics and the sciences, where we were previously under-recruiting and had severe shortage problems in the profession. We have piloted successful new routes into teaching, such as Teach First and the graduate teacher programme, which are encouraging graduates and mature switchers into teaching from backgrounds which previously did not go into it. I could answer on many other aspects of the education system, but the vital first priority is to get the quantity and quality of teachers we need in our schools. Once we get that right, all else will follow.

Baroness Morris of Bolton: My Lords, the advantage of grammar schools is that they teach outstandingly well and teach each child to their ability. These are values and aspirations we should wish to see extended to all our children, yet decades of mixed-ability classes have failed a generation of young people. What measures will be taken to ensure proper academic selection within our schools, given that the Prime Minister now supports the Conservative policy of strong discipline and setting as a mechanism for raising standards?

Lord Adonis: My Lords, it is a great relief to know what Conservative education policy is. I am glad that the noble Baroness has helped us. I was only recently reading an excellent speech called "The Future of Conservative education policy", delivered by the then Conservative education spokesperson a month ago—he has changed, since—which says that,
	"the Conservative Party has had to change ... We must break free from the belief that academic selection is any longer the way to transform the life chances of bright poor kids. This is a widespread belief but we just have to recognise that there is overwhelming evidence that such academic selection entrenches advantage, it does not spread it".
	What an excellent description of the Labour Government's policy, and I welcome the noble Baroness to our position.

Baroness Morris of Bolton: My Lords, what about setting?

Lord Adonis: My Lords, there is a great deal more setting in schools than there was 10 years ago, too. That is another policy being taken forward by this Government.

Baroness Walmsley: My Lords—

Lord Pilkington of Oxenford: My Lords—

Lord Rooker: My Lords, it is the turn of the Liberal Democrats.

Baroness Walmsley: My Lords, has the Minister read the recent Joseph Rowntree Foundation paper, Tackling low educational achievement? It says that anything which gives schools greater opportunities to select their pupils works to the detriment of disadvantaged pupils, and that measures which assist fair selection will help them. What does the Minister intend to do to force grammar schools to select their students more fairly?

Lord Adonis: My Lords, the issue of the remaining grammar schools, of which there are a small number, is for local voters to decide under the arrangements we set in place in 1998. The noble Baroness is quite right to say that very few poorer children are able to gain access to grammar schools, and we look to them to see that they play fairly by the communities in their area. Non-grammar schools are bound by the admissions code under legislation which the House passed last year. All schools are bound to implement the admissions code, which is tougher than what went before. We believe it will ensure fair intakes in schools.

Lord Pilkington of Oxenford: My Lords, has the Minister given attention or thought to the German system? Germany retained grammar schools and produced excellent alternatives to the extent that when East Germany joined the West, it abandoned its comprehensive system and adopted West Germany's system, presumably because it worked better. He might also cast an eye over Northern Ireland.

Lord Adonis: My Lords, the noble Lord makes a point about the importance of good vocational education, which is an aspect for which the German system is renowned. We need better vocational education in this country and more effective work-related programmes in schools, but we do not believe that we need to separate 11 year-olds into sheep and goats in order to get those quality programmes in our schools. A programme of work-related diplomas is being introduced. It is starting next year with diplomas in construction, the built environment, engineering, health, society and development, IT and creative and media. These diplomas will be a significant addition to the quality of education offered in work-related areas and will make the vocational side of our educational system much more like the German system.

Lord Harrison: My Lords, would my noble friend embroider his foreshortened Answer to assure the people of Wirral, where we still have grammar school education, that they will not be thrown into educational turmoil by the advent of a Government from the opposite Benches?

Lord Adonis: My Lords, we have elections in this country and, alas, I do not determine their outcome. After the brilliant start being made by my right honourable friend the Prime Minister, the people of Wirral and elsewhere can rest assured that this Labour Government will stay in office for a good while longer.

Lord Sutherland of Houndwood: My Lords, one of the issues that underlies the question of grammar schools is discipline in schools. Will the Minister tell the House what steps the Government are taking to improve the prospects for good discipline in all schools?

Lord Adonis: My Lords, having confident teachers who are properly supported by parents is an essential first step. As the noble Lord will know, last year the Education and Inspections Act for the first time introduced a statutory right for teachers to discipline pupils. It implemented a recommendation made by the noble Lord, Lord Elton, in a review committee that he chaired back in the 1980s, which had not happened. We have given a significant amount of guidance to schools to follow up the Elton report as it is implemented in schools. The support of parents is vital, and strengthening the relationship between schools and parents is crucial underpinning for discipline in our schools.

Crime: Teenage Murders

The Lord Bishop of Southwell and Nottingham: asked Her Majesty's Government:
	What assessment they have made of the causes of the recent violent deaths among teenagers; and what priority the Home Office intends to give to the matter.

Lord Bassam of Brighton: My Lords, the violent death of any young person is a tragedy. The Home Office has given, and continues to give, the issues of guns and knife crime the highest priority. We continue to work closely with law enforcement, other government departments and the community and voluntary sector to look at the causes of violence and how we can tackle it. This informs our three-themed approach of policing, powers and prevention.

The Lord Bishop of Southwell and Nottingham: My Lords, I thank the Minister for his reply. Does he agree that these violent incidents are the result as much of relational poverty as of material poverty? To what extent has the Home Office analysed the effects of relational poverty and formulated policies to address it?

Lord Bassam of Brighton: My Lords, we take these issues very seriously; for that reason, Communities That Care, the Safer London Youth Survey 2004, identified risk factors that can lead to violent behaviour. They include a variety of issues, such as family conflict, low achievement at school, the availability of drugs or weapons, and a lack of social commitment. Those factors are being tackled by cross-government programmes, including the respect action plan, Every Child Matters and extended schools.

Lord Elton: My Lords, the role of mentors has already been raised. Does the Minister recognise that it is relevant in this case, too, that children with no adult role models, particularly male adults, are increasingly at risk on our streets and feel safe only when they are in a gang, which perpetuates the problem? Will he therefore look at initiatives such as the Rainer Lambeth Youth Inclusion Programme, which unites education, social services and mentoring services to provide an area in which a young person can live and feel secure without resorting to violence?

Lord Bassam of Brighton: My Lords, the noble Lord is right to raise mentoring schemes as one of the approaches that works well; it is part of the thinking behind our preventative work. We have been funding many projects through the Connected Fund. Those include mentoring, and relate to family structure and organisation and the closeness of communities. We recognise fully the part that those facets can play in solving problems relating to gun crime and knife crime in our communities.

Baroness Howarth of Breckland: My Lords, does the Minister accept that a great gap is the lack of a strategic youth service, thought through to meet modern difficulties, with outreach workers who understand new ways of working with extraordinarily difficult young people? Does he agree that, while the voluntary sector, as outlined by the noble Lord, Lord Elton, is filling much of that gap, it would be better if plans were made right across the sector?

Lord Bassam of Brighton: My Lords, I understand entirely the noble Baroness's point; she has great experience, knowledge and understanding of the field. The Government benefit greatly from the advice and assistance we get, particularly from the voluntary sector. That is one reason why we have spent as much as we have. The latest estimate I have seen suggests that we put £1.6 billion a year into services for young people. Programmes such as Connexions, Positive Activities for Young People, the Neighbourhood Support Fund and so on make an important contribution in this field.

Lord Dholakia: My Lords, the impact of gun crime and knife crime is considerable in inner-city areas. On volunteers, has the Minister given any consideration to the involvement of black church groups and other ethnic groups in schools, youth activities and institutions, so that the seriousness of these crimes is brought to the attention of young people as they grow up?

Lord Bassam of Brighton: My Lords, we work with all faith communities and support the initiatives undertaken in many instances by different faith groups and churches. We should keep a sense of proportion about the issue. It is terrifying that we have gun crime and knife crime in our communities but, by and large, the level of knife crime is stable and declining and there has been a sharp reduction in gun crime. We are making progress, and there have been considerable successes. I encourage the noble Lord and others to focus on that, because it helps to give a lead in this field.

Viscount Bridgeman: My Lords, last March the Metropolitan Police Commissioner warned that, while most victims of gang violence knew their perpetrators, many fear the consequences of speaking out and are therefore reluctant to go to the police. What steps are the Government taking, for example through witness protection, to encourage teenagers to come forward and assist the police in dealing with violent incidents?

Lord Bassam of Brighton: My Lords, we do put resources into witness protection. Together with the police, we have committed many resources to securing that sort of activity, and it pays a benefit. We must at all times encourage witnesses to come forward, because we need properly to prosecute offenders.

Baroness Sharples: My Lords, how much does alcohol play a part in this problem?

Lord Bassam of Brighton: My Lords, it is a contributing factor; I go no further than that. Clearly, it has an impact.

The Lord Bishop of Worcester: My Lords, will the Minister pay tribute to initiatives such as the Damilola Taylor Trust campaign which take seriously those young people who have been involved in knife crime and gun crime and have turned away from it? It invites young people to,
	"respect your life, not a knife",
	and therefore builds on the fact that there are young people who have turned away from this kind of activity and have much to contribute to their peers.

Lord Bassam of Brighton: My Lords, I certainly pay tribute to the projects that have come out of the tragic case of Damilola Taylor. The Government have invested a great deal in programmes such as Positive Futures which provide lifestyle, educational and employment opportunities for young people. We have focused those activities and that spending in many inner-city and deprived areas. In particular, I pay tribute to the respect action plan, which has channelled funding very wisely into many projects to make more useful and valuable community activities available to many deprived youths.

Pensions Bill

Report received.
	Clause 1 [Category A and B retirement pensions: single contribution condition]:
	[Amendment No. 1 not moved.]

Baroness Hollis of Heigham: moved Amendment No. 2:
	Clause 1, page 2, line 36, at end insert—
	"( ) With effect from the commencement of this section or 1st November 2007, whichever shall be earlier, the contributor may at any time up to state pension age, make voluntary (Class 3) contributions for any period of his or her working life, in respect of up to 9 years, whether consecutive or not, which for any reason shall not have satisfied the conditions for a Qualifying Year or Years, so that such year or years shall then be deemed to be a Qualifying Year or Years.""

Baroness Hollis of Heigham: My Lords, I did not move Amendment No. 1 because Amendment No. 2 would overtake it.
	At the moment, more than 90 per cent of men, but only about 25 per cent of women, retire with a full basic state pension in their own right. That is because, for all their working lives, most men are in full-time waged work that carries pension rights, whereas most women are not. Women will have children, they will care for an elderly parent and they will care for grandchildren. Even when they are in work, they cannot always find a convenient job that allows them to juggle their lives, but instead make do with a couple of part-time jobs. None of that gives them a stamp. That is why, over the years, Governments of all parties have recognised the need to stretch the system with HRP for mothers and credits for disabled people and those caring for more than 35 hours a week.
	I am delighted that, in the Bill, the Government are helping carers and reducing the number of contributory years to 30 for men and women alike, and I hope that the proportion of women retiring on a full state pension will rise during the next couple of decades to 90 per cent. That is very good news, but it still leaves out thousands of women, especially in the next few years. Who are they? Anyone who approaches retirement in the next decade who has been caring for 30 hours a week or more for elderly parents will have no pension rights for that. Anyone who now or in future has two part-time jobs cannot add them together to get a pension. Anyone who now or in future is a grandparent who takes on childcare cannot get a stamp. In other words, there are and will continue to be groups of women who are living valuable lives of care and support who will be outside the pension system and will risk retiring into poverty.
	Can we help them? Yes, I think so, quite straightforwardly. Currently, you can buy missing years—any number of them—if you do so within six years of missing them. You can buy 40 of them if you want, on a rolling basis. Students buy them. People working abroad buy them. About 250,000 people a year buy them—the better educated and probably the better-off. That is because they know that with a full working life they will want a full pension record.
	Even if poorer women were savvy enough to know that, even if as unpaid grandparents they could raise the £350 a year for the stamp, they still would not know until the day that they retired whether they would really have needed the extra years. Their lives, unlike men's, are full of uncertainty. If they buy the extra years at the time, they may have wasted their money but, if they do not, they may have lost their pension rights. How can they tell what the future may hold and therefore what they should do? If their daughter moves away, the need for childcare may disappear. The elderly parents whom they are looking after at home may move into residential care. A part-time job may open up to being a full-time job. A woman may not know what she needs to do to make good her pension shortfall until she is already past the six-year deadline, by which time it is too late.
	The amendment would allow such a woman to buy up to nine added years when she retires and when she knows what she needs. Even if she had to borrow the money to do so, the increase in her pension would more than cover it because, at retirement, she can afford it. The amendment is very simple; the nine missing years can be bought at any time, and not only within the six-year deadline. It is also entirely practical; the system is already in place for 250,000 people a year who do buy those extra years, and perhaps another 20,000 or 40,000 women may join the system. It is a fair amendment; after all, a woman could have bought those missing years at the time if she had known that she would need them. There are no freebies or handouts; she still pays for those missing years, either at the time, or at the right price, according to the RPI, 10 years down the road. What difference does it make to anyone, provided that the price is adjusted when she buys them, except to her?
	The amendment is also very flexible. All sorts of people in the future will fall out of the pension system for a few years. We can either tinker with the system by tailoring it to the individual, which is complicated, or do as the amendment suggests and allow people to make good any deficiency at the end of their working life when they know what they need. It is especially fair for women, who will face a cliff edge: in March 2010, women who are 60 will need 39 years of contributions but, a month later, they will need only 30 years. The unfairness of that may be rather like the reduced married women's stamp; it will rankle. Allowing women to buy nine more years if they choose to do so would bridge that gap.
	Above all, the amendment, which would get rid of that six-year bar, would allow women, and men, to buy back their missing years and retire with a full basic state pension if they so wished. Many women will have had difficult lives. It would tackle their poverty and encourage them to save, and it might reduce means-testing. It is the right and decent thing to do and I hope that the House will support it. I beg to move.

Baroness O'Cathain: My Lords, I wholeheartedly support the noble Baroness, Lady Hollis, in all the work on fairness that she has been doing for women. This is not the first time that I have supported her. My support goes back to about 11 or 12 years ago, when we went through the whole sorry saga of pension splitting on divorce. The principle was the same. It is not feminism or anything like it, but fairness. I absolutely believe in the case that the noble Baroness has made completely succinctly.
	The House should realise that if women retire with an incomplete basic state pension, anyone selling them a personal account or a small pension risks mis-selling to them, as women face a pound-for-pound withdrawal rate on pension credits. Employers would understandably avoid that risk by encouraging women to opt out, yet again causing a problem or a potential problem. Yet these are the very women who need to save.
	As all noble Lords probably remember, there was a statement only last weekend about the savings ratio in this country having fallen from about 10 per cent to a ghastly figure of just over 2 per cent. The Government do not seem to think that this matters, but it matters terribly. My basic economics of many years ago taught me that one should aim to save over 10 per cent and below 15 per cent. Failure to do so means that some people could be stacking up a lot of trouble. Who are the people who will be involved in this trouble? It is the very women about whom the noble Baroness has been talking—those who have given up their working lives to look after elderly parents, children or disabled people in their own family. It is just a monstrous injustice and I hope the House will support the noble Baroness on this amendment.
	The financial industry and business also want all pensioners to have at least a full basic state pension, as that encourages saving. It would also avoid mis-selling and reduce what I feel is a very demeaning trend; namely, an increase in means-testing. I certainly give the noble Baroness my support.

Lord Dearing: My Lords, I rise diffidently to speak on this issue, but I am fortified by having read the nine-page leaflet to help people like me to understand these recondite matters. I refer first to the six-year rule: "Thou shalt do this within six years of having missed". That is a valid point whether you can buy six, nine or any other number of additional years. I argue this on behalf of ordinary people like me, of whom there are many, who lead busy lives and do not like to face the complexity of national insurance. While the document to which I have referred is written in commendably plain words, it guides one some three times in the relevant section to go to a website, yet many people do not have access to the internet. On one occasion the confession is made that these matters are extremely complex.
	The Leitch report pointed out that getting on for 20 per cent of our adult population are functionally illiterate. They find it difficult to understand leaflets and respond to official rules. The leaflet states elsewhere that the department "may" alert people to buy some extra years of pension contribution, but the implication is that it may not. The rules keep changing. Many ordinary people lead busy, complex lives. A woman bringing up children may not be in work, may be in work, may work part time, or may have two part-time jobs. When faced with this, she would ask, "Where do I stand?". In creating this complexity, we have a duty to help people to understand it. That is what I care most about in the proposal.
	There is also the question of cost. I accept that someone buying extra years just before they retire would be making a smaller contribution than if they had been paying in 20 years earlier, because the Government would have had use of that money much earlier. If that money had been invested for that time, it would have doubled in value. However, as the noble Baroness, Lady Hollis, stated in Committee on 4 June, her amendment does not specify what the contribution should be. Those who want to argue the question of the cost ought to recognise that.
	Also on the issue of cost, I argue that to give a person the opportunity to buy those nine additional years reduces the risk that the Exchequer will have to back in later years the total cost of everyone to sustain themselves. That point does not seem to be acknowledged. Which is better, to give people the chance to buy extra years so that they are less likely to depend on public support or to say, "Sorry, we can't help you; you've missed out and it's your fault"? Seven or eight years later, who will be carrying the can? A persuasive case can be made for this amendment.

Baroness Greengross: My Lords, the noble Lord, Lord Dearing, has been extremely eloquent and I want to add only a few words in support of the amendment moved by the noble Baroness, Lady Hollis. It is impossible to predict the circumstances in later life of people who now have or have had young families but have not made adequate contributions and want to be able to catch up. This applies almost exclusively to women, but not always. More and more men in middle age and later are finding that their own circumstances change dramatically. We know that many more men decide to leave their wives at the point at which the children are almost grown up. A lot of children now stay at home for much longer than they used to for all sorts of reasons that we do not need to go into now. They stay at home and they are a responsibility. Increasing drug and alcohol abuse makes the dependency of children as well as elderly people much more frequently a problem in families. Many women and some men now find that they have responsibilities they did not expect to have. We must help them. The noble Lord, Lord Dearing, made an impassioned plea; I support him and the noble Baronesses, Lady Hollis and Lady O'Cathain. We must do this for justice as well as for cost-effectiveness.

Baroness Shephard of Northwold: My Lords, I, too, support the amendment. I pay tribute to the noble Baroness, Lady Hollis, for her expertise and her tenacity in trying to correct a real anomaly in pensions provision, which she has, with her usual clarity, exposed to the House. She emphasised the number of women who are affected by this anomaly; we do not know the full number, but it is substantial.
	I should like briefly to point up the particular problems in rural areas. In rural west Norfolk, 12 per cent of retired women are likely to have the full pension provision compared with 92 per cent of men. Twenty-three per cent of retired women in Birmingham will qualify for a full pension provision compared with, again, only 12 per cent in rural west Norfolk. Thirty per cent of such women will qualify in Cambridge; 20 miles away in rural west Norfolk, only 12 per cent will.
	Why is this? As the noble Baroness has explained in the past, it is mostly to do with rural employment patterns. A woman may well have to take a number of low-paid jobs. She might have three jobs: she might be doing vegetables in the morning, cleaning in the afternoon and, more than likely, working for a private caterer in the evening. None of those jobs pays her enough to qualify her for this pension provision. It is extraordinary. The noble Baroness has provided us with an opportunity to correct the anomaly in an entirely sensible way which may find favour with the Minister. We cannot speak, of course, for the Treasury.
	Another issue affecting rural areas is that many older women have to give up work altogether, either to look after grandchildren or to look after elderly parents. I make this point especially for rural women because the access to childcare or to day care for elderly relatives is limited by transport. If you do not have two cars in your family, you can forget it; you do the caring. So women are doubly or trebly disadvantaged if they live in rural areas. That is why the amendment should be supported.

Baroness Thomas of Winchester: My Lords, as the noble Baroness, Lady Hollis, has said, if we are going to keep the contributory principle, the amendment would meet several needs. First, it addresses the steep cliff face that will be reached in spring 2010, when woman number one could retire needing 39 years' worth of contributions for a full state pension but the day after woman number two would need only 30 years' worth of contributions. Under the amendment, anticipating this change before retirement, woman number one could buy nine years of class 3 contributions. Would that really be so complicated? We are not talking, after all, about tapers or backdating, which might be both more complex and expensive than what is suggested in the amendment.
	The Minister may say that the amendment would encourage some people to invest money that they would have spent in paying contributions on the nail, knowing that they could buy contributions at a later date. However, I do not think that that is a likely scenario given the kind of people whom this amendment is designed to help. The most obvious of those are those groups of women whom we have heard about today who do not have a full contribution record for the basic state pension. The Minister will almost certainly say that bringing down the number of years from 39 to 30 is quite enough help for that group because nearly every woman, whatever her circumstances, is likely to have some periods of settled employment. However, that is not the calculation of those who have studied people's work patterns, who reckon that over 1 million people, most of them women, will not have a full basic state pension in 20 years.
	When the noble Baroness, Lady Hollis, moved the amendment in Committee, she made a powerful case, part of which was that, because of the failure of a government computer, people were indeed able to buy more than the six years allowed now to make up for the deficiencies in the contributions that the computer had failed to tell them about in time. If it was not too complicated then, why is it too complicated today?
	Today, more than ever, people live for the moment. They have a portfolio of jobs, with often not much thought for their pensions. But, as they reach retirement, these people may inherit some money, which they would like to use to plug several gaps in their contributions record for earlier years in order to receive a full basic state pension. What more prudent course could they take? However, unless the principle behind the amendment is accepted, they will not be allowed to.
	Obviously the amendment is not cost free, but, as the noble Lord, Lord Dearing, said, if it prevents the need for so much means-testing for retired people in the future, that surely must be factored into any calculations of cost. I simply ask the Minister to consider the problem again. After all, he has said already that to make such a change does not need primary legislation; it can be put through as delegated legislation under the Social Security Contributions and Benefits Act 1992. The Bill gives us a golden opportunity to put fairness into the system by accepting the amendment, which we strongly support.

Baroness Lockwood: My Lords, I hope that my noble friend the Minister will be able to accept the amendment tabled by my noble friend Lady Hollis. In effect, it deals with the historical problem of women not being encouraged to pay their own contributions or to think in terms of earning a pension in their own right. Policies have changed, and the Government's policy is to encourage people to save and invest as much as they can during their working lives in order to have an adequate pension when they retire. However, they do not necessarily retire at the minimum state retirement age. We are now encouraged to continue beyond the minimum retirement age, and we are moving up to a period when men and women will have an equal retirement age.
	This discrimination will not be so great in the future. I hope, therefore, that the Minister will see that the principles behind the amendment meet the Government's objectives and that he will be prepared on those grounds, and on the grounds of fairness and social justice, to accept the amendment.

Baroness Howe of Idlicote: My Lords, it is important that as many noble Lords as possible speak in favour of the amendment in order to ensure that the Minister is in no doubt whatever about the strength of feeling in the House. We are extremely lucky to have the Bill before us. It has at last recognised the important role that carers have played for quite a long time in our economy—that is a major feature—but inevitably parts of it need updating a little.
	We are even luckier to have with us the noble Baroness, Lady Hollis, who has been a Minister and has expertise in every aspect of this area. You can bet your bottom dollar that if she says this proposal will work, it will. If the noble Lord, Lord Dearing, is prepared to admit that he finds some of this quite difficult to follow, then I feel less shy about admitting that I find it even more difficult to do so. There are people who are much less versed in these matters—they may have fewer contacts and support, and cannot ask their consultants or accountants—and it is even more important that they have help. I so agree with the noble Baroness, Lady O'Cathain, about fairness—that, more than almost anything else, needs emphasising.
	I am very glad that the amendment has been backed by so many people, such as the first chairman of the Equal Opportunities Commission. The EOC is in favour of the amendment, along with Age Concern, Help the Aged and Carers UK. We have support everywhere, and now would be a wonderful moment for the Minister to acknowledge this and say that action will definitely be taken.

Lord Forsyth of Drumlean: My Lords, I support the amendment of the noble Baroness, Lady Hollis, who looks slightly surprised, for many of the reasons that have been put forward, which I shall not repeat, but particularly on the ground of fairness. I think that the proposal is actually unambitious—it is the right proposal at this moment to provide a remedy.
	The idea that national insurance contributions are separate from other forms of taxation and that they go into a fund is a complete fiction. I spent about a year of my life chairing the Tax Reform Commission, and the relationship between tax and national insurance is almost incomprehensible. There are different periods over which national insurance applies and different starting rates. It all makes great difficulties for employers and the case for at least aligning the two systems is enormously strong.
	I suspect that the Minister will point to cost. If he is worried about cost, he can find additional revenue by simplifying the system. It will shift the burden on to some people but they tend to be pretty well to do. The Minister is shaking his head, but if he looks at the way in which national insurance bites, it falls on people with lower incomes. People who earn very big sums of money are not making a proportional contribution. That is because the Treasury maintains this fiction that national insurance is different from tax, that somehow it is a charge for a particular benefit. We all know that that is a fiction. Successive Governments have avoided confronting this fiction because if they provide the remedy, it looks as if they are putting up the burden of taxation.
	The Minister should be brave and accept the amendment. He should persuade the new Chancellor and the Prime Minister that there is an opportunity here to simplify the tax system and make it fairer and that, far from being revenue-neutral, it is possible to do what the noble Baroness suggests and increase the revenue available to the Exchequer. This is a legislative opportunity, and I hope that it will be taken.

Lord Howarth of Newport: My Lords, my noble friend has drawn attention to a palpable deficiency and a notorious injustice in the present arrangements, whereby the contributory system fails to recognise the myriad contributions to our society made by women who are not in regular or well-paid employment. My noble friend has put forward an imaginative and practical solution to this pressing problem.
	Of course it is right that the Treasury looks sceptically and searchingly at all new proposals of public policy to see what the costs may be. The Government have had plenty of time to examine the cost implications of my noble friend's proposals, so I hope that my noble friend the Minister will be able to tell the House what assessment the Treasury has made of the cost of this, netting off against the cost the savings on benefit contributions that might otherwise occur, to which the noble Lord, Lord Dearing, drew attention.
	I cannot believe that any costs that the Treasury has been able to accumulate against this proposal would bear any comparison with the costs of open-ended and indiscriminate tax relief at 40 per cent on private pension contributions, which the Government are more than happy to allow. The proposal is affordable; it is decent; and it is the proper thing for the Government to do.

Baroness Miller of Hendon: My Lords, I shall be brief, because every point of the amendment, with all its faults and deficiencies, has been covered. The present position is anomalous, discriminatory and, most of all, unfair. If the noble Baroness decides to test the opinion of the House, I shall for the first time vote in a way that my noble friends on the Front Bench probably will not. I believe that they will abstain—I have not discussed it with them, but that is what I think they will do.
	The noble Baroness is not only tenacious, as my noble friend Lady Shephard said, but also enormously courageous. She had the courage to plough on at the very beginning—it went on for two minutes—when noble Lords were walking out, talking and not hearing anything. The problem is that, if we divide on the amendment, a lot of noble Lords will not have heard all the arguments. Before we take advantage of voting in the way we ought, we might gently mention to our noble friends the opinions of the whole House. It is time that we dealt with all the anomalies by supporting the noble Baroness.

Lord Turner of Ecchinswell: My Lords, I support the amendment. We on the Pensions Commission had two concerns about the state pension system as against the private pension system. The first was to make sure that as many people as possible ended up with full basic state pensions in order to minimise the impact of means-testing, which would be a disincentive to the improvements in private savings that we have to achieve. We were also very aware that we needed to increase dramatically the fairness of the state pension system to women.
	The Pensions Commission debated two different ways to proceed. One was to suggest that the Government should head towards a residence-based form of basic state pension, or a citizen's pension as some people call it, where everybody would receive a basic state pension simply by having been resident in the country for a certain number of years. That would have the advantage of being the only way to ensure that everybody—in particular, all women—had a full basic state pension. It is of course more expensive than improving the contributory system. The other way to proceed would be to improve the effectiveness of the contributory system by making it easier for women in particular to accrue years of rights through carer responsibilities rather than through paid work.
	The Pensions Commission came down in principle in favour of a residence-based approach, though we always understood the arguments of those who were in favour of improvements in the contributory system. We found in focus groups that many people are attracted to the contributory system; they feel that people ought to receive something for a contribution. That principle has a merit even separate from the points made by the noble Lord, Lord Forsyth, about the arbitrary differences between national insurance and tax.
	Therefore, when the Government came forward with their proposals, which were an improvement to the contributory system but slightly different from what we had proposed, I could strongly support them. The way forward they chose—that is, a reduction in the qualifying years to 30—was an imaginative way of making sure that the vast majority of people would achieve a full basic state pension looking forward.
	However, that still leaves two clear problems. First, a small, but still important, minority of women, often on low incomes, will not achieve a full basic state pension and will therefore be dependent on means-tested benefits in retirement. That is true even looking forward. We are getting the full basic state pension forecast for women for up to something like 90 per cent, but we are still short of the 97 per cent or 98 per cent, at which point you could be confident that the only people who were not getting it were, as it were, rich people who had chosen not to work. That is the flipside the contributory system; you would always accept a few percentage points, but as long as it stands at 90 per cent, we know that some of the 10 per cent who are not there will not be people who have chosen not to work but people who have simply failed through their life—through having earnings lower than the lower earnings limits or falling through the rules on carer responsibilities—to get the accrual of rights that they ought.
	That is one problem. The other problem is the one of the cliff edge. The way in which the Government propose to proceed is that, looking forward from 2010, people will receive basic state pensions on a 30-year rule thereafter, but it will not affect those people who retire before then. This is an imaginative way of trying somewhat to mitigate the problem of the cliff edge and trying significantly to deal with the remaining minority of women who will not get to the full basic state pension, looking forward.
	To my mind, therefore, this measure is the final thing required to produce a contributory system that would work, rather than a residency-based system. I urge it on the Government as the final step that they must make to be able to say that we do not have to move towards a residency-based system but that we have a fully updated and effective version of the contributory system.

Lord Fowler: My Lords, we have just heard a very significant speech, because the noble Lord has spent a great deal of time considering the pensions system in this country. He carried out a review of pensions and social security, as did I 20 years previously, and we have both come to the same conclusion about this amendment. I support the amendment in exactly the same way as the noble Lord supports it.
	I congratulate the noble Baroness, Lady Hollis, on persisting in putting this proposal forward. I cannot remember who said that he hoped the Minister would listen to the debate, but I think that the Minister would have to be deaf if he had not heard what has so far been an entirely unanimous argument in favour of the amendment. Dare I say it, I hope that those on my own Front Bench are also listening to the argument in the same way?
	I give three reasons for supporting this amendment. First, there is the argument that the noble Lord, Lord Turner, has just put—the argument of the cliff edge. The Government are reducing to 30 years the contributory years for a pension but, at the moment, there is a severe cliff edge. A woman who retires in February 2010 still needs 39 years' contributions; if she retires in May 2010, she needs only 30 years. By allowing the first woman to buy back the nine years, that problem would be substantially overcome.
	Secondly, I give the reason also given by the noble Baroness on the Liberal Democrat Benches—that it is perfectly possible to do it. This Government have done it in allowing people to buy back not just nine but 12 years. That was because of a mistake in their computers, but if it can be done for 12 it can self-evidently be done for nine.
	Thirdly, the amendment would strengthen the contributory principle. As long as there is no other system—and there is no other system—surely that is what we want to do. We do not have an insurance system in this country; we have a pay-as-you-go system, which means that the contributions of today pay for the benefits of today. The people making those contributions rely on the assurance of the Government that in their turn they will be helped.
	There is nothing revolutionary or new in the idea of buying back. I dare say that quite a number of Members of this House have done exactly that—I certainly have, as a Member of Parliament. I know that people in the Civil Service have, too. As for cost, surely there is the offset of means-tested benefits that we will avoid by going down this road. I hope that that will be taken into account.
	I shall be perfectly frank—I do not trust the Treasury on pensions. All my past experience tells me that Treasury staff are the worst possible people under the sun to have charge of the nation's pensions. I think that the noble Lord, Lord Barnett, was nodding; at least, he was smiling. He has more experience of that than most. Above all, this measure would quintessentially help women who have had their careers interrupted by the demands of family. Indeed, the latest figures show that of the 250,000 people who bought back years in 2004, almost 150,000 were women. The figures speak for themselves. Therefore, I see this as a measure of equality and common sense. I hope that the House will support it.

Lord Turnbull: My Lords, having worked in the Treasury for more than 30 years, four years as Permanent Secretary, I shall now try to make amends. We should imagine Britain partitioned, not north-south, as it is now, but east-west. The east is run by the Revenue and Customs Party, which believes that when you have accumulated a certain amount of wealth, it should be turned into an annuity to provide a better pension. The west is run by the Department for Work and Pensions, which has a different philosophy. As women there approach retirement or pension age, the department sends them a deficiency notice telling them how many years they are short of being able to get a full pension and explaining that they can buy back up to six of them. So in the east we have compulsory annuitisation while in the west we have compulsory limitation of annuitisation. Does this make any sense? The answer is, no it does not.
	But let us look at it another way and suppose that this amendment has been passed and its provisions are in force, and someone comes forward with a proposal to move to the present position. Can you imagine anyone giving house room to that, even for a moment? The truth is that people make decisions in ignorance and in conditions of uncertainty, and they make mistakes. A number of examples of change of circumstance have been referred to. Why should we not try to help people rectify those mistakes, particularly when they are claiming something to which they were at one time entitled? What could the arguments possibly be? One argument could be that it is expensive to stimulate take-up. However, the DWP spends millions of pounds encouraging people to claim the benefits to which they are entitled. It does not use the costs of take-up as an argument against doing that, and I hope that it will not be deployed as part of the argument about cost here. People should be able to claim that to which they were entitled.
	The second argument could be about administration. Is it difficult to track down the records? Obviously not, because all that information is in the deficiency notice. However, it is completely unacceptable that you send someone the information when it is too late for them to act upon it. If you want to retain the present system, the only way in which you could make it defensible is that every year someone is reminded what their deficiency is so that they then have the opportunity to rectify it.
	Perhaps there is an argument that the deal is priced wrongly actuarially. However, that objection applies to all back years bought, not just to back years bought some time ago. Why should we allow a well advised trust fund kid to buy back years but restrict the opportunities to women who may have been informal carers, but below the level which would formerly have earned them a credit?
	I hope that the Minister will explain the principle that is being defended here, because I cannot see it. The current proposals seem to have no logic other than that they have grown up over time. As I indicated, the measure is inconsistent with rules in other areas of pensions and it is inconsistent with the philosophy that we should encourage people to claim the rights that Parliament has voted for them.

Lord MacGregor of Pulham Market: My Lords, I hesitate to follow the remarks of my noble friend Lord Fowler about the Treasury because as a former Chief Secretary to the Treasury I thought that he might have been getting at me. I say straightaway that I am on his side in this argument, as, indeed, is the noble Lord, Lord Turnbull.
	I was not able to attend the debate on 4 June, but I read Hansard very carefully. I found the noble Baroness's arguments compelling and I agree with the points that were made this afternoon. I am just going to make one point about the costs.
	I appreciate this is a different amendment from that of 4 June. I am not sure how different, because I have not been able to follow the complexities. I noticed that the Minister on 4 June rested a lot of his argument on costs. I was astonished to read what he said about costs. He said it was difficult to estimate them exactly and he was making certain assumptions. Nevertheless, he said that the costs, which the noble Baroness, Lady Hollis, described as modest, would provide net benefits in 2007, 2008 and 2009 of £1 million, £0.5 million and £0.2 million respectively. He went on to say that thereafter there would be costs of the order of £0.8 billion, £0.9 billion through to £0.8 billion in 2030. I do not know to what years these billions applied—that was all he said. I thought when I first read it that it must have been a misprint. For the Minister to bring these costs forward, very baldly, at the last minute, and expect to frighten us off is just not good enough. That is what I felt he was trying to do. In addition to looking at the net costs—offsetting the means tests and benefits that would otherwise be incurred—he must give us an accurate breakdown of how he reaches that figure if he is to convince us, because I find it inexplicable.
	My last point is that between 1997 and 2001, because of the computer mistake, the Government were prepared to introduce a bigger system, when presumably costs did not enter into it. If the Minister is going to rest his argument on costs, he must be an awful lot more convincing than he was last time.

Lord Barnett: My Lords, could I have a word with the House? There is probably nobody else here who has stopped as much expenditure as I have over the years. I did five years as Chief Secretary—I cannot believe that even the noble Lord, Lord Turnbull, would have stopped as much expenditure as I did during that time. In this case, I cannot think of a reason for opposing my noble friend's amendment. The case she has made, and that has been made all round the House, is so strong that the only objection the Minister could bring would be based on cost. The noble Lord, Lord MacGregor, has just quoted the figures. The Treasury can do all kinds of calculations—I have done some accounting in my years there and outside. To talk about £0.2 billion or £0.8 billion over God knows how many years is nonsense.
	We are talking here about a really important amendment that will help not only hundreds of thousands of women, but others as well, so why oppose it? The only reason the Treasury will have given the Minister will have been cost. The noble Lord, Lord Fowler, mentioned net costs, and I was nodding not because I do not trust the Treasury—that would be a terrible thing for me to do—but because it occasionally gets the figures wrong. In this case, it cannot get it right—it is not possible. Nobody can say what the cost is going to be, net of means-tested benefits.
	We should be aware that total public expenditure these days is in excess of £500 billion. We are talking about petty cash here. To turn down an amendment as important as this for petty-cash reasons would be outrageous and I very much hope that the Minister, whatever the Treasury has told him, will ignore it. He really can afford to ignore it—especially as he is not even being paid for his job.

Noble Lords: Oh!

Lord Barnett: My Lords, it can only be the Treasury that wants the Minister to try to stop the amendment, and I hope that he will ignore it. I hope he will not try, but if he does, then I urge my noble friend to press it and I am sure the House will accept it.

Lord Higgins: My Lords, I intervene briefly to make a point that no one else has made. In 1964, my maiden speech in the House of Commons was on the plight of the so-called non-pensioners who had been left out of the national insurance scheme when it was introduced. I made the point that they were as entitled as anyone else to that part of the national insurance pension not covered by contributions. When we came into office in 1970, the Treasury went along with that and the injustice was rectified. There is a considerable comparison here. People who have been allowed to contribute and who have made their correct contributions get a huge amount that is not covered at all by contributions. The idea that the contributions pay for their pension, if in the past that money had been invested, is totally untrue. In any case, there is a gross injustice for the people to whom the noble Baroness, Lady Hollis, referred. She made an overwhelming case. Points about cost have been made by a number of noble Lords and I shall certainly vote in favour of the amendment, if she presses it to a Division.

Lord Graham of Edmonton: My Lords, I stumbled into this debate and stayed riveted until the end. I cannot conceive of an argument that the Minister could deploy that would destroy the authoritative nature of the comments made all around the House. But I was a Chief Whip for some years and sat on the other side of the House some 10 to 15 years ago. As I listened to my colleagues making an argument, I often said "The Minister must accept this argument", and found that he did not, because he had a brief which told him to resist. I rise in response to the comments of the noble Baroness, Lady Howe, who said that it was obligatory for people here not only to vote but to stand up and speak out, that is what I am doing. Based on the arguments that we have heard, if this amendment is pressed to a vote, I will support it.

Lord Oakeshott of Seagrove Bay: My Lords, this has been an excellent debate and the mood of the House is clear. I am not sure whether I envy the noble Lord, Lord Skelmersdale, or the noble Lord, Lord McKenzie, less in making their wind-up speeches. I have one question for the Minister. How on Earth can a Labour Government, spending billions to help rich people by giving them top-rate tax relief to save for a pension, oppose poor women with broken work records being able to save for a modest pension themselves? That is what this issue comes down to.

Baroness Gardner of Parkes: My Lords, I came in specifically for this amendment because it is so important. Following the advice of the noble Baroness, Lady Howe, the more people say that, the better. I will be very happy to vote for it.

Lord Skelmersdale: My Lords, as the noble Lord, Lord Oakeshott, has just said, the Minister and I stand in a rather difficult position—I put it that way—because the noble Baroness is, to an extent, quite right. There is absolutely no doubt that women are disadvantaged under the current system and many noble Lords have spoken of this. The burden of childcare or care for elderly or disabled relatives still falls much more heavily on them than on their male counterparts. Women are still more likely to work part-time or in low-paying jobs. All of this adds up to significant difference when it comes to pension entitlement, leaving women disproportionately likely to be in poverty, as my noble friend Lady Shephard said. That would make them dependent on means-tested pension credit.
	With that in mind, I am very sympathetic to the noble Baroness's reasons for moving the amendment. However, I am not convinced that her provisions will do much more to help women than the Bill already does. The 30-year requirement combined with a much more generous system of carer contribution credits will do a great deal to help women meet the minimum requirements for a full state pension. I accept that there is a cliff edge of nine years, which is why nine years is stated in the noble Baroness's amendment. What I do not know, and I do not know if anyone knows, is how many women currently use the six-year provision and how many are likely to be using the nine-year provision. Perhaps the Minister will be able to tell us the answer to that.
	There is another way of operating all this; it is not my party's policy. I would like to hear the Minister's reaction to the suggestion that, rather than being allowed to make up the last six years through class 3 payments, resident people, especially women, should be allowed to make up any six years of missing payments. I emphasise the word "resident" because I know that one of the Minister's worries is that of increasing the bill for expatriate pensioners.
	My noble friend Lord Higgins said that this amendment discourages people from contributing to their pension throughout their life. It is—he did not say this, but this is what his view amounts to—a calculated gamble that they can meet the minimum requirements just before they retire. I do not believe that that is the right way to go.

Lord Higgins: My Lords, I do not think that that is what I said.

Lord McKenzie of Luton: My Lords, I start by thanking my noble friend for giving us a further opportunity to debate—

Noble Lords: Oh!

Lord McKenzie of Luton: Genuinely, my Lords; this is a very important issue. I also acknowledge my noble friend's tenacity and commitment. The sentiment of all those who have spoken is clear. I shall endeavour to point out what I think is a significant difficulty with proceeding with the amendment.
	I also acknowledge that we are moving from a pension system in which women in particular were discriminated against to one that is much more robust, with a 30-year contribution provision and enhanced credits for care; that is a dramatic change for women in particular.
	A number of noble Lords reminded me—chided me over this, perhaps—that dealing with national insurance issues involves the Treasury, where a certain amount of responsibility clearly lies. The headline figure is that around 50,000 people in Great Britain reaching state pension age in 2010 will not be entitled to a full basic state pension either on their own contributions or their former spouse's or civil partner's contributions. And, of course, many more people who have worked in the UK at some point in their lives but who are no longer resident here will also reach state pension age in 2010 without entitlement to a full UK basic state pension.
	Noble Lords have acknowledged that most people at home and overseas can pay voluntary contributions but must generally do so within a six-year time limit. For example, a person has until 5 April 2010 to pay for the 2003-04 tax year to make it a qualifying year for the basic state pension.
	I say to noble Lords, including the noble Lord, Lord Turnbull, that it is not right that deficiency notices come only towards the end of a person's working life; they come routinely annually.
	As drafted, my noble friend's amendment would limit the overall number of years for which a person could pay voluntary national insurance contributions to nine. However, my noble friend confirmed in Committee that this is not its intended effect. What she and the EOC are seeking is a de facto removal of the time limit to allow people to pay up to nine extra years in addition to the years that they can pay for under the current rules. However, the amendment as it stands does not achieve the objective that she is seeking; at the moment, you can make contributions, as my noble friend acknowledged, over 40 years so long as you pay them at each juncture within the six-year time limit. This amendment would—unwittingly; I do not believe that it was intended—restrict that. I cannot believe that we would want to support that.
	Generally, a person can pay class 3 contributions for as many years during their working life as they wish provided that they pay within the time limit. Class 3 contributions are primarily intended to enable people to fill relatively small gaps in their record. The current weekly rate of class 3 contributions is £7.80 regardless, of the individual's age. Payment for a particular tax year enables that year to qualify for basic state pension and bereavement benefits. As such, the contributions represent extremely good value for money.
	A number of noble Lords, particularly the noble Lord, Lord Dearing, raised the fact that the Government Actuary's department estimates that class 3 contributions would have to be charged at around £28 a week, rising to around £38 a week after state pension reform, if the cost were to reflect the state pension bought. The Government have long recognised that raising the cost to those levels would create a barrier for those on low incomes who may want to pay voluntary contributions to enhance their state pension and have, therefore, kept the level of voluntary contributions relatively low.
	This year, for example, a person who has paid contributions on earnings of around £3,000 can make up the shortfall to accrue a qualifying year for basic state pension by paying about £140 in class 3 contributions. If the contributions were charged at £28 a week the cost would increase to over £500. The current cost of class 3 contributions and the time limits for paying provide a sensible and workable compromise. The time limits prevent those who can afford to from maximising their entitlement to the state pension just before retirement. In the absence of a time limit for payment, a rational person could hedge his or her bets by investing the amount that they would otherwise pay in contributions until they reach pension age. That way they obviate the risk of not surviving to pension age and potentially see a return on their investment well in excess of the increase in the rate at which the contributions were charged over the intervening period.
	All that said, the Government have sympathy with the spirit of my noble friend's amendment. It would give those who did not have the means at the time, or were unaware that they could pay, a second opportunity to do so at state pension age. However, such an easement could not be restricted to people living in the UK. We would also need to grant it at least to people who have also been insured in another member state of the European economic area. Here, I am afraid, we come to the crunch point, as a number of noble Lords have anticipated, which is the potential cost.
	Since our deliberations in Committee, analysts in the DWP and HMRC have been doing some further work. Even allowing for the additional revenue flow into the National Insurance Fund and assuming that only 15 per cent of those eligible take up the option to pay extra class 3 contributions, we estimate that the cost of allowing people reaching state pension age from 2008 to 2020—the period of the exercise—to pay for up to six years falling between 1975 and 2010 will be around £260 million a year in 2020, gradually reducing thereafter. If noble Lords wish, I can run through that in more detail. However, on the basis of that analysis, the bulk of the cost—around £230 million in 2020, which is close to a quarter of a billion pounds—would appear to be on pensions for people living outside the UK.
	At this stage, we cannot say for sure what proportion of those people would be covered by EC law; therefore, we cannot, with certainty, determine to what extent, if any, the costs could be constrained. Without any restriction, we would be spending something approaching a quarter of a billion pounds in 2020 on overseas pensioners to provide a remedy for—on the 15 per cent take-up assumption—fewer than 10,000 UK pensioners each year. By any yardstick, that would be completely disproportionate. Even more disproportionately, if all those eligible overseas were to take up the option, it would mean a cost of about £1.5 billion in 2020. There are significant cost issues associated. If noble Lords want, I am happy to go through the methodology by which those estimates were made.

Noble Lords: Oh!

Lord McKenzie of Luton: My Lords, I understand the reaction. Serious work has been done and continues to be done on that. It is a very important matter.
	Until we have a better understanding of the potential effects, we cannot judge the viability of this option. I make no bones of the fact that this further analysis will be far from straightforward, as we do not necessarily know where these people are living now and where they were living in the past.
	I appreciate that this is not what my noble friend was hoping for. However, I assure her that we have given her proposal serious and detailed consideration, and will continue to do so while looking at alternative options. As she is aware, any necessary changes to the time limits for paying class 3 contributions could be made by secondary legislation. However, I stress that the amendment would limit to nine the number of years for which people could pay voluntary contributions, and this is surely not the desired outcome. Technically, the amendment as drafted is defective.
	I shall emphasise the dilemma here. We sympathise with the objective, and further work will be done to see whether we can contain the sort of costs I have been talking about. We must be extremely careful about opening up a channel to genuinely help a range of women who have missed out in the past and, by doing so, allowing in an armada, which would have huge public expenditure costs, a lot of it possibly for people resident overseas—resources we could deploy in a variety of other, more beneficial ways. It is a real dilemma.
	Under the present provisions, people who have been working and have paid national insurance contributions for three years generally can still for the rest of their lives pay class 3 contributions and accrue entitlement to the UK basic state pension. The 25 per cent de minimis rule has been inhibiting some of that.

Lord Forsyth of Drumlean: My Lords, I apologise for interrupting the Minister. Are those living abroad whom he refers to, who would benefit from the provision and add to the cost, British people who have gone to live in an EU country? Who are we talking about? Presumably they have paid their tax and so on.

Lord McKenzie of Luton: My Lords, they are both. They do not have to be British citizens who have moved abroad. The rule is that if you have worked here and have made three years' national insurance contributions, you are entitled to pay class 3 contributions and gain further entitlement to a basic state pension. In the past, the take-up of that has been limited because of the 25 per cent de minimis rule; you have to get a quarter of your working life in terms of credits before you get anything. There was obviously a disincentive there. In 2010 the de minimis rule goes and only 30 qualifying years will be involved. I suggest that that changes the picture, and there are some real concerns. I am not saying that we cannot find a way through it, but work needs to be done to ensure that we can; otherwise, substantial public expenditure will be involved.
	I know that that is not what the House wishes to hear, but it is the reality. That is the dilemma that we have been focusing and working on, and will continue to do so. We all share my noble friend's aspirations to help this group of women, in particular, who have missed out. However, we must be careful about opening up a greater problem by the manner in which we do it, resulting in substantial costs. For that reason, I earnestly urge my noble friend not to press the amendment. I confirm to her that we will continue to work on this, and to—

Lord Filkin: My Lords, would we not be supporting my noble friend in his endeavour to get a proper solution to the problems he has articulated if the House gave a clear expression of opinion in support of the issue? The Government have plenty of opportunities subsequently to bring back a better amendment that addresses any technical defects and the policy point that he rightly indicates impedes him slightly from supporting what I believe his heart is truly with.

Lord McKenzie of Luton: My Lords, this House should be about trying to, if it feels it appropriate, pass proper amendments to improve the legislation as it sees right. I think that the mood of the House in this debate will be very clear to anyone reading the record; an amendment is not needed to get that expression across clearly. I stress that we are dealing with very serious issues here. The House should not press an amendment that, with great respect to my noble friend, is technically deficient, restrictive, does not achieve what she wants and creates a problem that we are still working on. I ask my noble friend to withdraw it.

Lord McIntosh of Haringey: My Lords, will my noble friend address the benefit to the Exchequer of a reduction in the cost of means-tested benefits, which noble Lords raised?

Lord McKenzie of Luton: My Lords, I apologise for not dealing with that. The numbers that I quoted are net of that. I have a tabulation assuming 100 per cent take-up and 15 per cent take-up of the UK component and the overseas component, and that comprises gross pension costs, net pension costs and is net of benefit reductions, the revenue from class 3 contributions and the net impact. I would be happy to share those figures in more detail with the House. That work has been genuinely going on. We need to be very careful about going down a route to help people which has serious, wider ramifications.

Lord McIntosh of Haringey: My Lords, before my noble friend sits down—

Noble Lords: Oh!

Lord McIntosh of Haringey: My Lords, this follows directly from the point that my noble friend was making. He said that he is very happy to share the figures, but clearly Members of the House cannot take such complicated calculations into account when we are deciding what to do. Will my noble friend undertake to set out a complete résumé of the calculations that he has been describing in good time before Third Reading?

Lord McKenzie of Luton: My Lords, I am very happy to share the data I have with the House before Third Reading. Inevitably, it will have associated caveats, but I will make sure that it covers the methodology undertaken so that noble Lords can see the numbers in context.

Baroness Hollis of Heigham: My Lords, first I thank very sincerely everyone who has taken part today. As my noble friend accepted, there has been widespread support from everyone who has spoken, men and women alike. Several former Secretaries of State, including the first Minister for Women, three former Chief Secretaries, a former Permanent Secretary of the Treasury and the chairman of the major and historic Pensions Commission all support the amendment. I ask my noble friend where the support was for his position today. There was none. He made the point, which I absolutely accept, that the amendment may be technically defective. Every ex-Minister in this House—there are many of us here today—knows that very often the House may decide to support an amendment that is technically defective, and if that expresses the opinion of the House the Government then take on the responsibility to come back at Third Reading with an amendment accordingly. That is not an issue; obviously we just do not have the drafting skills that the DWP would have.
	This is a very simple amendment. At the moment, if you miss a year when you are 45 because you are looking after a sick relative, you can buy it at age 50; but you cannot buy it at age 59. It is often only at age 59 that you know that you need to do it, but by then it is too late. The amendment would permit women and men to buy up to nine missing years at the proper price at the end of their working lives when they know whether they need to do it. No one is getting anything extra; we are not extending eligibility in this at all, because everyone who could buy at the end of their working lives could have bought earlier. That is why the cost assumptions are actually fairly flaky. Everyone who would be eligible to buy at 59 could have bought perhaps at 55 or 50 had they known, had they been able to afford it or had they been able to assess whether they needed to. In the amendment, we are simply extending the possible take-up of a right that already exists for all of us.
	My noble friend has run only one real argument, which is cost. But, hold on, 250,000 people already take up voluntary purchase. We accept the cost of that, even though it is students or people working abroad who may well be building additional pensions. Yet for poorer women, who I am concerned about, this may be the only pension they can ever afford—there are perhaps 40,000 of them—and we are told that we cannot afford to allow them to take up their rights in year seven, although they could had bought them in year six.
	That is absolutely absurd. As for workers overseas and the cost of possibly £230 million, apart from the de minimis rule, every one of them can buy now. I repeat: provided the cost is adjusted, I cannot for the life of me see why it matters whether you buy the added years when you are 45, 50, 55 or 59. That is the only point of the argument. It really will not do that those who know about voluntary purchase and can afford it at the time—I suggest that they are the better educated and the better off—do so, but those who do not know about it, who are less well educated, less savvy about the system and less able to afford it do not. Who are they? Very often they are women who have exhausted themselves by physically and financially caring for others.
	I repeat: nobody would buy anything that they were not already entitled to under existing rules. They would merely buy the entitlement when they knew they needed it. That is all that this amendment would do. If the argument of cost is, "We cannot afford them to take up the provision", then, my goodness, that applies to every benefit we have. Nobody in this House would raise an argument, for example, that as only 85 per cent of people take up council tax benefit, we should not encourage the other 15 per cent because we cannot afford the take-up. Nobody would say that, because 90 per cent of people claim DLA, we will not encourage the other 10 per cent to take it up as we cannot afford the take-up. Yet that seems to be my noble friend's argument—we cannot allow people to take up a right that they already have by getting rid of the six-year bar. We would not run that argument anywhere else, except today apparently.
	I suggest that the arguments are spurious. If we want people, especially women, to have pensions—as we do—we cannot also argue that we will not allow them to buy added years to build that pension. We want to help women to help themselves. They have to live on something. If we do not allow them to buy their own pension, they will live on a means-tested benefit that they have not paid for. Which makes better sense?
	I hope that your Lordships will today support the amendment. The other place has not even considered the issue. If we support it today, we will have done something rather special because we would have ensured that virtually all women in this country can retire, if they choose, with a full basic state pension. For the first time since Beveridge, we would have completed the contributory principle.
	That would be a wonderful thing to do today. I propose to test the opinion of the House.

On Question, Whether the said amendment (No. 2) shall be agreed to?
	Their Lordships divided: Contents, 179; Not-Contents, 86.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 3 [Contributions credits for relevant parents and carers]:

Lord Skelmersdale: moved Amendment No. 3:
	Clause 3, page 3, leave out lines 28 to 33

Lord Skelmersdale: My Lords, the Deputy Chairman's sotto voce announcement of this amendment rather reflects my own intended speech, but whether I shall be allowed to make the speech I want to make, I do not know. We will see how we get on.
	The amendment seeks to explore the issue of carers a little further. In Committee, the noble Baroness was clear about the definition which the Government intend to use to identify those who should be credited with carer contributions. She explained with understandable pride the new provisions. On these Benches, we fully support the changes. We are also glad that the Government's original intention that these credits should be extended only to those caring for a person entitled to certain benefits has been modified to include anyone caring for more than 20 hours a week. That is a most definite improvement. However, I am concerned about how effectively these proposals are going to be implemented. Can the noble Baroness explain further how a health or social worker will be expected to calculate whether someone is caring for over 20 hours a week? What evidence will be required to prove this if the department decides to challenge a claim? Sooner or later, that will be inevitable.
	As praiseworthy as the intention might be, the Government have not yet given sufficient thought to the nuts and bolts of this clause. It will not help carers, who already have unusually complicated and stressful lives, to promise them better support and then be unable to deliver. The Government must make sure that they can follow through. The only comment the Minister has given on the implementation of these provisions is a review that is being held with relevant organisations. Can she give us any more information on this consultation? How long has it been going on, when is it expected to end, and how soon can we see the proposed regulations that will implement these provisions?
	On reflection, the Government's attitude seems to be yet another repetition of the age-old formula of wanting to do something in a Bill and then some time later working out exactly how to achieve it in regulations. Members on this side are getting thoroughly fed up with this approach to legislation. I hope the noble Baroness will be able to reassure me that that is not happening on this occasion. I beg to move.

Baroness Morgan of Drefelin: My Lords, I am sorry that the noble Lord, Lord Skelmersdale, is feeling fed up. I hope that my comments will offer him some reassurance. I am delighted by the support that he has again expressed for the carers provisions in the Bill and thank him for tabling the amendment, which provides us with a further opportunity to discuss the new carer's credit.
	As noble Lords know, one of the key drivers for the Bill is the recognition of the unpaid contribution made by many women throughout the country. Where circumstances can be defined easily, we specifically recognise these unpaid contributions; hence our new definition for carer's credit where the amount of care provided to a severely disabled person is to be 20 hours or more each week. Of course we cannot define every circumstance. However, we should not forget that those who do not receive the carer's credit will still benefit from other parts of the package, such as the reduction in the number of years required to build a full basic state pension to 30.
	The amendment concerns unpaid activity that can be defined. As noble Lords will recall from the Committee stage, the amendment relates to the definition of the term "relevant carer". I explained at some length in Committee the background to the Government moving away from the current system of home responsibilities protection to a new system of carer's credits. Rather than repeating that now, I should like to focus on the point that the noble Lord raised today, explain the thinking behind our reliance on secondary legislation as opposed to primary legislation to do this, and give him some more background on the carers review.
	Overall, the Bill includes significantly more detail than predecessor Bills. Indeed, virtually all current crediting arrangements are found in secondary legislation, and so in that regard this Bill is not different. As ever, though, a sensible balance has to be struck on these matters. As the noble Lord, Lord Skelmersdale, acknowledged in Committee, there is a balance to be struck between the flexibility afforded by secondary legislation and the certainty—but, by the same token, less flexibility—provided by primary legislation. In leaving the definition of "relevant carer" to secondary legislation, our objective—as noble Lords will recall from our deliberations in Committee—is to ensure that the eventual definition captures all those who are caring for 20 hours or more a week for a severely disabled person. Although that is a reasonably uncomplicated concept, I am sure the House will recognise that the legal definition will require significantly more technical detail than the relatively straightforward definition relating to, for instance, parents' eligibility at subsection (3)(a) of new Section 23A, which hinges simply on the age of the child.
	Through the review of the National Carers Strategy we are working with key stakeholders, in particular with charities such as Carers UK, to develop a definition of a "relevant carer" who may be certified by a health or social care professional as caring for at least 20 hours a week. There has been a debate about how many people such a person might be caring for and we recognise that it might not necessarily be for just one person. Obviously that is a potentially complex area. This approach meets both our objectives and the needs of carers which have been so ably championed by a number of voluntary organisations including Carers UK. But this cannot be achieved overnight, not least because the findings of the review are scheduled to be reported at the beginning of 2008.
	I shall go into some detail about the carers review. It will be a cross-government review. There is a steering group, chaired by David Behan, the director-general of social care, which includes senior representatives from the Department for Business, Enterprise and Regulatory Reform, the Department for Children, Schools and Families, the Department for Communities and Local Government, the Treasury and the DWP. Importantly, the group also includes the chief executives of the three principal carer representative organisations—Carers UK, the Princess Royal Trust for Carers and Crossroads—and there is representation from the Children's Society, which picks up one of the noble Lord's concerns about children's carers.
	There will be four task forces. One will look specifically at health and social care, which will be led by the Department of Health. One will look at equalities, and will be led by the Department for Communities and Local Government. The DWP will lead the group looking at employment as well as the group looking at incomes, which is of significance today. The last group has yet to meet; I understand it will start its work later this month, when it will look at this issue among others. Each group will be chaired jointly by the department and an independent non-government chair. The responsibility for making recommendations from the group will be led by the chairman, David Behan. To be clear: the review of the carers strategy will be published in early 2008.
	I have tried to reinforce the Government's commitment to tackling this issue in a responsible and detailed way. I remind the House that, once we get to the question of regulations, they will be made by the affirmative procedure on first use. This House will therefore have every opportunity to debate the regulations when they are laid as soon as possible after the review of the National Carers Strategy has been reported. With that further information—and I hope I have not been too boring on the matter—I hope the noble Lord will consider withdrawing the amendment.

Lord Skelmersdale: My Lords, I will certainly withdraw the amendment, but it was not the fact of secondary legislation I was querying; it was the timetable for the preparation. What is happening yet again is that the Bill comes first while the consideration of what is to go into the secondary legislation is coming second. That was my complaint. However, I am glad that at last the income sector of the review, led by the DWP, is to meet by the end of the month. That may or may not make the situation even worse, because the Bill is due to be finished in your Lordships' House by the end of the month, and may possibly be on the statute book. Who is to tell?
	I am, as I said, glad that thinking is at last progressing on this issue, and we will get a resolution in due course. I shall look forward to the statutory instrument. May I anticipate that it will arrive by 1 April?

Baroness Morgan of Drefelin: My Lords, we have to be clear that the review needs to be undertaken in a very considered and consultative way. I would need to write to the noble Lord specifically on whether the review can be expected by 1 April.

Lord Skelmersdale: My Lords, I await the letter with interest. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 5 [Up-rating of basic pension etc. and standard minimum guarantee by reference to earnings]:

Baroness Hollis of Heigham: moved Amendment No. 4:
	Clause 5, page 6, line 22, at end insert—
	"( ) For the purposes of any review under subsection (1), the Secretary of State shall take into account the effect of the possible future payment of a basic state pension upon the basis of residency in the United Kingdom, using the relevant data stored under the provisions of section (Record keeping for future payment on residency basis)."

Baroness Hollis of Heigham: My Lords, in speaking to Amendment No. 4 I shall speak also to Amendment No. 6, which is the more substantive one. Having already trespassed on the generosity of the House, I will not seek to press the amendment to a vote. However, the issue it raises is important and I wish to go round the track once more and then call it a day, at least for this Bill.
	This is a very modest, nil-cost amendment, which is about future-proofing as far as we can. We have a contributory system for the BSP which Governments of all parties have tweaked, patched and twiddled with over the years in order to bring as many people as possible within it. Today, as a result of your Lordships' support, we have, I hope, finally got a contributory system which is more inclusive than it otherwise could conceivably have been. However, although we will, I hope, end up with a comprehensive contributory system, it remains complex and obscure. I was very struck by the comments of the noble Lord, Lord Dearing, on the previous debate about just how complex he found the system. I defy most people to know what they are and are not entitled to at any stage because of the complexity of the system, however good the intentions behind it.
	The Government believe—and I hope that they are right—that in the next couple of decades, 90 per cent to 95 per cent of the population will be drawing a full basic state pension. By then, a Government who are radical, enlightened and far-seeing may decide that we should clean up this untidy, ramshackle process, which has accreted over the years, and have a basic state pension based on residence. They may or may not. But to do so, there needs to be a record of residence—a database—and we must start building it before we need to employ it. As the noble Lord, Lord Turner, said in his report, if that is the path we are going down, we have to have a lead-in time in which to build up a database so that Manuel from Spain who is here for two years does not automatically qualify.
	A future Government may not wish to change the structure but if they do, they will find it very difficult unless a previous Government had kept their options open for them. One of the lessons we have learnt from pensions legislation over the past years is that we are rather good at dealing with problems when they have emerged but rather bad at anticipating where problems will emerge—in other words, future-proofing our legislation. The amendment would simply keep options open for a future Government. It does not commit that Government to doing anything but it would allow them to make a decision with the information they needed which otherwise they would not have.
	The amendment seeks to build a residence database. Is it straightforward? I think so. We already have a pretty good database in the electoral roll. Some 97 per cent to 98 per cent of working-age adults who have not moved house in the past year are on that roll, and local authorities are already required to retain that roll for 15 years. Records could be cross-checked with council tax rolls and even, down the line, with the proposed identity cards, should they emerge. This could ensure that only those who have a genuine, bona fide record of residence would qualify.
	I anticipate that, based on his response in Committee, my noble friend may run two broad arguments. First, he may say that residence is very hard—possibly too hard—to establish and that unless we know what we are establishing, we should not go down that road. Secondly, he may be against the amendment in principle. On the first argument, I suggest that consultation with electoral registration officers, local authorities, and so on, could address the inevitable follow-up questions about who qualifies. I suggest, as a starting-off point, Sections 4 to 7 of the Representation of the People Act 1983. They give a useful and workable definition which has been in existence for 25 years and presents, as far as I know, and according to the chief executive of the Association of Electoral Administrators, no problems at all. But, as there is no suggestion that we would go down this path in the next two, three or five years, if there were any problems, issues and wrinkles outstanding, then we would have plenty of time to address them.
	The amendment is about establishing the principle. I do not ask my noble friend to agree that principle today. That is not the point of the amendment. I am not asking the House to support the principle of a residence-based pension; I am asking only that they support the principle of allowing a future Government to make that decision if they so wish. A different Government may take a view that is very different from that of the Minister. It is good public policy to keep options open, to future-proof. We owe to future Governments and future citizens of this country the practical possibility of clearing up the system if the Government of the day believe that it is right. I beg to move.

Baroness Thomas of Winchester: My Lords, some of us believe that the contributory principle is on its last legs because of the complications of the system and the need for ever more pieces of sticking plaster to address them. I well understand that that is not the Government's view, but it was the view of the Turner commission, which advocated a universal basic state pension based on residency for those over 75. Keeping electoral registers just in case that view finds favour with future Governments is eminently sensible and commits the Government to nothing, but this amendment is needed for it to be legal to keep the registers for this purpose, as the noble Baroness said. What possible harm can acceptance of the amendment do? It does not have to be triggered until a future Government wish it. We support the amendment from these Benches.

Baroness Dean of Thornton-le-Fylde: My Lords, I, too, support Amendments Nos. 4 and 6. The Pensions Commission considered the matter and stated specifically that it preferred the way forward to build on the present two-tier system with an individual and universal system. It stated that by "universal" it meant based on residency rather than on contribution records or eligibility for credits. In general terms, the Government accepted the Turner report, although I am not saying that they accepted and agreed with every word of it.
	The amendment is necessary. We have all learnt in dealing with pensions that this is not an issue for today; it takes many years to address. Quite often, one's ability to make changes is stymied because of a lack of information. It is one of the problems that we face when considering pensions for women with broken service. The amendment would help to overcome that hurdle. I hope that the Minister will give a little more support to it at this stage of the Bill than he was able to last time.

Baroness Greengross: My Lords, I support the amendment. It relates to the principle that we have in this country, and which I think we all accept, that no Government can make decisions that cannot be reversed by a future Government. I congratulate the Government on taking a much longer-term view than is usually the case. The amendment seems to be about prudence, with all that that implies, keeping in line with the recommendations of the Turner report and looking towards the long term. We cannot tell now what view a future Government might take on residency being the criterion for receiving a state pension. The amendment is a simple way of ensuring that that it is possible should a Government wish to do it.

Lord Skelmersdale: My Lords, in introducing the amendment, the noble Baroness, Lady Hollis, said words to the effect that it was previous, and intended to be previous, to keep the door open for a future Government to do something that neither this Government nor this Official Opposition have the slightest intention of doing. I therefore find it difficult to support even the long-term thinking of the noble Baroness. It follows therefore that we cannot support the unnecessary collection of personal information for something that we never expect to happen. Indeed, I am slightly gobsmacked by the whole idea. Collecting these data before the public have even a chance to comment on the desirability of a universal state pension, no matter what the noble Lord, Lord Turner, and his commission have said, is at best a waste of time and at worst completely undemocratic.

Lord McKenzie of Luton: My Lords, it is slightly worrying to find myself on the same side as the noble Lord, Lord Skelmersdale, twice in a row. However, the amendments give us a chance to discuss again whether pensions should be provided on the basis of contributions or of residency, although I understand that that is not my noble friend's direct proposition. I thank her for tabling the amendments, which stem from a commitment on her part to ensure that state pensions are available to as many people as possible, particularly women who may have been discriminated against because of how the system has operated in the past 60 years.
	The Government's reforms modernise the contributory principle and will deliver fair outcomes to women and carers as a priority. The Pensions Commission proposals supported a residency accrual-based pension, but our reforms will address concerns about the current system and improve outcomes for women and carers far faster than the commission's proposals would, as has been acknowledged and welcomed by a number of commentators.
	The two amendments together would have the Government collect information to support a future Government's possible decision to move to a residency-based pension and each year, as part of the normal departmental uprating process, to review the build-up of information and record keeping on residency. The assumption is that at some point we could then introduce legislation to switch from the new contribution test, which we will introduce in 2010, to a new residency test.
	The annual review of benefits is a routine process in the life of the DWP. It starts with a review of benefit rates in the autumn, is followed by consideration by both Houses over the winter and, most important, provides increases in benefit rates at the beginning of the new tax year. I agree that, should we ever introduce a completely new way of testing the basis on which people build their basic state pension entitlement, we would want to keep the evidence that underpinned the new test under review. However, should we ever go down that route, we would want to form bespoke legislation to underpin the evidence-gathering process, rather than borrowing from what we have to try to fit it into existing legislation.
	That leads me on to a discussion of Amendment No. 6, about the storage of relevant information for the purpose of enabling the possible future payment of a residency accrual-based basic state pension. My noble friend has made it clear in previous discussions that this amendment does not say that we must have a residency-based pension; rather, it is intended as an enabling amendment to allow a future Government to explore residency as an approach that could be adopted some time in the future.
	There is nothing to prevent the Government from keeping this aspect, or any other aspect of reform, under review in the longer term, but without legislation. We believe that our reforms provide a long-term settlement for pensions, but that does not mean that we will not be assessing reform outcomes. For example, we know how important it is to establish why people fail to build up a full basic state pension, which is why we are undertaking research on this, including consideration of people who will retire in 2025.
	I make this point because my noble friend believes that the Government should keep their options on residency open in the long term in case reform outcomes are less successful than predicted. However, we have no reason to believe that this will be the case or that residency would deliver better outcomes. She may fear that, unless we start to collect information for residency, we will not be in a position to consider residency as an alternative. Adopting a residency approach raises a problem in that there are no appropriate records beyond those that exist under current tax and benefit systems to support that approach, and we do not believe that there is any effective proxy information.
	My noble friend has suggested that electoral register data could help to fulfil this role and quoted in Committee research from the Electoral Commission that she believes supports this view. This is the evidence that, of people of working age over 45 who have not moved house in the past 12 months, between 97 per cent and 98 per cent are on the electoral roll.
	This research, which is found in the report Understanding Electoral Registration: TheExtent and Nature of Non-registration in Britain, published by the Electoral Commission, relates to the position in England and Wales in 2000-01. It raises a number of other issues worth noting with regard to electoral register information and how well it might support residency requirements. This same research indicates that around 3.5 million people across England and Wales were eligible to be on the register at their main residence but were missing from the register in 2000—this equates to between 8 and 9 per cent of the population.
	Areas with the highest levels of unemployment and income deprivation had the highest levels of non-registration. Non-registration was highest among private renters, the unemployed, those without qualifications and those in non-permanent employment—indeed, many of the people whom my noble friend is most concerned about.
	This gap in coverage of the electoral register represents a small but significant and disadvantaged minority, who could find it difficult to prove residency if electoral register data were the basis for determining this. Of course, the precise outcomes would depend on the exact test of residency to be used, and this is where the next problem arises.
	To consider residency seriously, we need a definition of it and a test to determine it, which in turn would determine the information needed to support this proposal. But this amendment makes the collection of information the starting point, with consideration later once we have that information of whether it is actually useful for determining residency. To do this without consideration of fundamental issues, such as the length of test and the implications on the universality of the basic state pension, would not be sensible. Our reforms are intended to make it easier to build up full basic state pension entitlement, and any residency approach should be considered similarly.
	As to the practicality of using electoral registration data to determine residency, the electoral register simply provides evidence of a person's eligibility to vote. It indicates that a person lives at a particular address but cannot on its own confirm this or tell us how long that individual has lived there. There is no way in which to link periods of residence at different addresses to say whether the John Jones who lived in Anywhere Avenue in 2004 is the same John Jones who lived in Somewhere Street in 2005. Some form of unique identifier or other information would be needed to make this work, and currently no additional identifier is included on the register except in Northern Ireland.
	The use of unique identifiers or other information in conjunction with electoral registration data would require further arrangements and legislation to be put in place. This presupposes that a test for proportionality and justification of the use of such information could be met for data protection purposes. This is not necessarily the case, as this amendment is about information for possible future use, not definite future use. Without this, at best the amendment would allow for the collection of information but without the ability to make practical use of that information.
	Legislating now for a potential move to a residency basis, and regular consideration of this as part of a largely unrelated process, is not necessary. It risks undermining the long-term nature of the Government's pensions settlement by leaving the future operation of the contributory approach open to question.
	With regard to electoral register information, we believe that the use of such data to support a residency-based approach is questionable. In terms of universality, there would still be gaps in coverage. Electoral register research suggests that the use of register data to prove residency could particularly affect people from disadvantaged backgrounds, yet the outcomes delivered would still not better those from our reforms.
	I think that my noble friend indicated that she does not propose to press the amendment. I encourage her not to do so.

Baroness Hollis of Heigham: My Lords, I am grateful to my noble friend for his full and thoughtful reply. However, I was slightly taken aback by the response of the noble Lord, Lord Skelmersdale, who said—I think that I quote him accurately—that the measure was "a waste of time" and "completely undemocratic". Perhaps I did not make this sufficiently clear, in which case it is entirely my own fault, but the amendment seeks to keep options open for a future democratically elected Government to make a democratic decision. However, they would not be able to do so unless the prior information tools were already in place.
	Given that this is a nil-cost amendment and given that local authorities already have 15 years' worth of these data now, as required by law, for the life of me I cannot see why it would be expensive, why it would be a waste of time or why it would be undemocratic. The noble Lord's comments may have been addressed to an amendment that I did not actually move.
	My noble friend made several comments. First, I do not think that the amendment is so much about the Government collecting information; they would bring together the information held by local authorities and keep it under review. He made the valid point that the existing electoral register does not provide a unique identifier. However, this has not proved an insuperable problem for verifying information relating to overseas electors, largely because the onus is on the applicant to provide sufficient information for the verification to take place. That would remain the same in any such system.
	Secondly, on residency, Section 4 of the Representation of the People Act 1983 says that the individual is entitled to be registered if on the relevant date he is resident in the constituency. Sections 5 to 7 deal in considerable detail with the issues relating to residence. It would not be difficult to amend those.
	Finally, although the Minister says that the registers are held locally by individual local authorities, it is also true—and my noble friend did not mention this—that the Government have taken new powers in the Electoral Administration Act 2006. I wonder whether the DWP is fully aware of what is going on in what is now the Ministry of Justice on some of these issues to create—I was not aware of this until I went into the matter—the equivalent of a central record through the CORE project. Provided that the necessary legal provisions are in place, which is done easily by regulations, there is no reason why CORE could not be used for this purpose. Most of the quasi-administrative, quasi-technical arguments that my noble friend advanced can be easily overcome, as I am assured by the society of electoral registration officers.

Lord McKenzie of Luton: My Lords, does my noble friend accept that the evidence suggests that many people are not on the register, wherever or however it is kept? The evidence is that most of them are disadvantaged people—we know that from our own experience. Would she further confirm that you can be on the electoral register if you live in a particular location for three months of the year and spend nine months in the Cayman Islands? Would somebody who did that be resident, for the purpose of her residency test?

Baroness Hollis of Heigham: My Lords, that person at the moment can acquire a full basic state pension through the contributory system, as we have previously discussed. There is no difference; there is full eligibility now for them.
	On the first point about record keeping, at the moment local authorities keep the registers. I have checked with the Electoral Commission, academic researchers and the society of electoral registration officers, and their best estimate is that 97 per cent to 98 per cent of those between 45 and 65 are on the electoral roll. When one goes canvassing—

Lord McKenzie of Luton: My Lords, I am sorry to interrupt. That statistic refers to people who did not move house. We need to know how many people moved house to be able to judge that statistic.

Baroness Hollis of Heigham: My Lords, my noble friend is absolutely right to qualify that. I made it clear in my opening statement. The best evidence that I have on the churning point is that, according to the society of electoral registration officers, around 2 per cent of people between 45 and 65 move house; we are talking about a 2 per cent churning, because this is the most stable group.
	The ones who are not on the register are young people. They may be students, people in rented accommodation or lodgers. They are mobile. Other people not on it are those for whom the property is a second home. Occasionally they may be absentees, but you can enrol at any stage. I think that my noble friend unwittingly misled the House last time—you can enrol on the electoral register at any point in the year.
	In my view, there are no technical problems to this amendment. The question seems straightforward. Are the Government willing to work with local authorities and registration officers to create—identity cards may well remove this need—a database that a future Government of any party or complexion could use to make this judgment if they wished? By saying no, the Government are closing down options for the future which they, or someone else, may seriously regret.
	I am not proposing to press this matter today, but I have to say that none of the arguments that my noble friend has advanced seems at all difficult to address, particularly over a timescale and in consultation with people who are doing this job now, on the ground. I delicately suggest that those people have more expertise in this matter than certainly I, and possibly he and some of his officials, have. Nevertheless, with the permission of the House, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Oakeshott of Seagrove Bay: moved Amendment No. 5:
	After Clause 8, insert the following new Clause—
	"Independent Pensions Commission
	The Secretary of State shall, no later than 1st January 2010, establish an Independent Pensions Commission which shall report to Parliament and Government every four years on—
	(a) the terms, benefits and affordability of public sector pensions,(b) the latest trends in private pension saving (and the impact of means-testing), and(c) the latest trends in life expectancy and average retirement ages."

Lord Oakeshott of Seagrove Bay: My Lords, the amendment is in my name and those of the noble Baroness, Lady Greengross, and the noble Lord, Lord Fowler. I shall speak also to Amendment No. 34, tabled by the Conservative Front Bench.
	This is a consensual, cross-party amendment. I do not propose to go in detail through our discussions in Committee but I have done my best to take on board the points made very well by the noble Lords, Lord Fowler and Lord Howarth, who tabled amendments on similar but not identical lines to my own. The noble Lord, Lord Fowler, made a good point when he said that we did not need to have two commissions, one for the public sector and one for the rest. This commission deals with both public sector pensions and trends in private pension saving, life expectancy and the average retirement age.
	The noble Lord, Lord Howarth, made a very good point when he said:
	"If we had had a standing pensions commission 30 years ago, vast amounts of money and misery would have been saved",
	and that we need one to,
	"routinely assemble and publish information on the relevant issues for both the public and the private pension sectors".—[Official Report, 11/6/07; col. 1568.]
	Although the noble Lord has not added his name to this amendment, I hope that he will support the proposal in debate and in the Division Lobby.
	This amendment seeks not to prejudge the outcomes of the commission's deliberations but to find a pensions consensus that is built to last. It is the unfinished business from the Turner commission—which has done so much to build the present consensus, so far as it goes, and to bring about the massive changes in our pension system that have done much in the short term. In our view, however, it is essential to have a long-term, independent and stable pensions commission. We are supported in that by the National Association of Pension Funds, which I thank for its support. Its idea is to create a permanent body to monitor the adequacy and sustainability of the UK pensions system. The association is, like us to some extent, talking of a board comprising a small number of expert appointees.
	I suggest that the commission should be larger than the Turner commission, which had only three people. I envisage a commission of six or eight people. It would be a small but expert commission and certainly include one representative from each of the three main parties to cement consensus in the long term. The Government Actuary or someone of equal standing would be a member to provide specific input on longevity, a critical issue in pension funding. The commission would certainly include someone with substantial public sector experience, in addition to a pensions expert from a body such as the PPI. Those are the sorts of ingredients that I would suggest. Looking around the House, I see in their places the sorts of people who I would envisage as commission members. I should hope that people with that sort of expertise will be available.
	A parallel with the Monetary Policy Committee of the Bank of England can be usefully drawn here. Of course you cannot take pensions policy entirely out of politics, any more than you can take economic policy out of politics; but just as the crucial decision to set interest rates is better done by experts, the analysis of trends in these key areas is best done by a commission with a substantial expert element. The Government say that they are in favour of consensus but they are not in favour of a consensus that they cannot control. It was noticeable that this was the one major recommendation of the Turner commission that the Government were not prepared to implement. Frankly, I thought that their reasons were pretty thin.
	We are asking for a body that reports every four years, as the Turner commission suggested—that is, once in a typical Parliament—which we think is about the right time to review the situation, particularly when one is talking about long-term changes in the state pension age. That must be the right way to do it. Age got completely stuck, as it were. When I became my party's pensions spokesman a few years ago, the idea of raising the state pension age was thought to be almost too hot to touch. The noble Lord, Lord Turner, has done a great service in opening that up and getting a resolution. We must have a means whereby those figures can be looked at regularly and in an authoritative and independent way.
	The problems of the affordability of public sector pensions are well known. I look forward to the noble Lord, Lord Turnbull, discussing in more detail how that affects management in the public sector and other problems. I shall give one example of the imbalance between basic pay and the accrual of pension rights in the public sector. I have recently had the annual report of the Bank of England and I see for, I think, the third successive year—certainly for the past two years—that the increase in the transfer value of the Governor's pension rights, at £379,000, is substantially more than his total pay and allowances for the year. We have a very unbalanced position. Funnily enough, I remember a few months ago having a discussion at dinner with one of the executive directors of the Bank of England, who said to me that he would, frankly, have a bit more salary now so that he could buy a house rather than the very generous pension pot in the indefinite future. We had a little chat to see if there was any way in which we could structure a deal but I am afraid that we could not. More generally, public sector workers would welcome a greater range of options, such as having more salary now as opposed to building up a very expensive pension scheme liability. That is the sort of thing that an independent commission could examine in a non-partisan, sensible, calm way.
	I turn to the amendment of the noble Lord, Lord Skelmersdale. Essentially, it calls for more regular reports on public sector pension liabilities. We support the amendment; it is a useful move so far as it goes but I do not believe that it is a satisfactory substitute for the much more independent, sustainable and long-term proposals that we are making. Facts and reports are useful, but they will come from the Government. Frankly, you do not put Ministers and civil servants in charge of reporting what their own gold-plated pensions will cost the taxpayer; that should be done, as a point of principle, independently.
	I ask noble Lords to support Amendment No. 5. The House is in quite an independent mood today and I invite independent-minded Peers on the Conservative Benches in particular to support this cross-party amendment. I beg to move.

Lord Fowler: My Lords, I have added my name to the amendment and I am glad to support my Seaview neighbour. I shall speak briefly.
	In my view, this is one of the more important amendments—if not the most important amendment—before the House. It follows amendments that the noble Lord, Lord Howarth, and I tabled in Committee. They were not quite the same but they were pretty indistinguishable.
	I would put the case in this way. For years the clamour at Westminster has been for pre-legislative scrutiny. The argument has been that if only we had thoroughly examined the legislation before it was introduced, then all would be well and all the faults eliminated. There is nothing wrong with pre-legislative scrutiny but it is only half the story and, arguably, not the most important half. Post-legislative scrutiny is also required. Many of the most expensive mistakes in pensions over the past 30 or 40 years have happened not because the legislation was badly prepared or unclear; they happened because the legislation was not implemented properly. Frankly, it would have been very simple and very easy to prevent those errors and mistakes.
	I gave an example in Committee from my own experience, regarding legislation that we introduced in 1986. The clearest assurance was given—it could not have been clearer—that wide publicity would be given to a change affecting widows and their pensions. The assurance was given by the then Minister of State, John Major, and it was emphatic. Was the assurance followed? Emphatically, it was not. The fault was not in the legislation or in parliamentary scrutiny; in fact, Mr Major gave the commitment in response to opposition requests for such an assurance. The fault was in the fact that the assurance was not honoured. That was frankly admitted by the then Permanent Secretary in the pensions department when I went to see her. She told me quite plainly that the Civil Service had been in error and was to blame. That can happen. I make no particular criticism of the Civil Service; we all make errors. It is also true that Ministers take responsibility for anything that takes place. In this case, it should be recognised that the Ministers—self-evidently, I was not one of them—were not at fault. The point is that all of that, and the cost that went with it, could have been avoided by decent post-legislative scrutiny. A commission with the type of remit suggested in the amendment would prevent such errors and faults taking place.
	I have a final point. I do not mind what argument is used against an independent commission examining what has taken place in pensions, but I would like to be preserved from the argument that was used in the last important debate that we had, on costs. This measure would save the Treasury money, not lose it. There is no comparison between the puny cost of an independent commission, where we are talking about very modest sums indeed, and the sums—the tens of millions and hundreds of millions of pounds—that could be lost. In many ways this is probably the most cost-effective measure that could be introduced at this stage.
	This is a sensible step forward. It is not particularly radical. It is certainly in line with the Pensions Commission and with sensible pensions policy. It keeps us up to date—above all, it keeps the Government up to date—on what is happening in the pensions area. It keeps us up to date on the emerging cost of public sector pensions. I make this argument with no particular optimism that the Government will accept it, but if they fall down on this legislation and other legislation which they have passed, they will have no one to blame but themselves. Worst of all, they will lose taxpayers' money in putting these things right. One must remember that if errors are made on pensions, the final bill can be very big indeed. Even at this stage, I urge the Minister to accept the amendment. It will not weaken his policy but strengthen it.

Baroness Greengross: My Lords, I am pleased to add my name to the amendment of the noble Lord, Lord Oakeshott, for two reasons in particular. I also declare two levels of interest, as president of the Pensions Policy Institute and as chief executive of the International Longevity Centre. With the first hat on, I should point out that some of the models produced by the PPI have shown, and can quickly demonstrate, that change happens fast. Exactly as the noble Lord, Lord Fowler, just said, it is important that we should have post-legislative scrutiny and are able to keep up to date with the trends.
	Paragraph (c) of the amendment mentions:
	"the latest trends in life expectancy and average retirement ages".
	Governments—and a commission, if one were set up—need to know those trends, because our national statistical office has got them wrong. The ILC always looks at the implications of longevity for everyone and also a little into the future to see how policies must adapt to cope with changing life expectancy and what that means for all of us. It would be wise for the Government to have a commission whose only job was to be up to date the whole time, monitoring the situation. As the noble Lord, Lord Fowler, said, it would not only save money but keep us all up to date on what is needed. I am happy to support the amendment.

Lord Howarth of Newport: My Lords, I support the amendment. I explained briefly at Second Reading why I favour the principle of an independent pensions commission, and more extensively in Committee when I moved an amendment which had very much the same effect as the amendment in the names of the noble Lords, Lord Oakeshott and Lord Fowler, and the noble Baroness, Lady Greengross.
	As the noble Lord, Lord Fowler, said, so far from cost being an argument against the establishment of a commission of this kind—I suspect that that is part of the reasoning both of the government Front Bench and of the Conservative Front Bench—there is every probability that if we were to have such a commission, enormous amounts of money would be saved. In Committee, I asked the Minister if he would tell us what the cost of the Turner Commission had been and if he would contrast that with an estimate of the cumulative cost of the series of miscalculations, misjudgments, errors great and small which have beset public policy on pension over many years. I recited a litany of those errors. There can be no question that £1 million or £2 million to pay for the cost of a standing commission on pensions which would furnish the Government and all of us with authoritative and timely advice on emerging pensions issues would be a worth while investment indeed for the nation.
	I quibble a little bit with the proposition from the noble Lord, Lord Oakeshott—which is not in the wording of the amendment but was in his speech—that the commission should contain party-political nominees. I am not entirely enchanted by that. I think that the important thing to do is to have people of recognised independence on an independent pensions commission and people of recognised authority—people of the calibre of the noble Lord, Lord Turner, Professor Hills and Ms Drake. No doubt the commission could indeed be more numerous than that commission was if a case were to be made for it.
	It is surprising that the Government should be resistant in that the Government are attracted by the principle of being advised by panels and commissions of independent experts in other contexts. Monetary policy has already been mentioned but I rather think that the Government are attracted to a body of independent experts to advise them on environmental issues and climate change issues. That seems entirely sensible. It strengthens the resources of expertise and advice and is a stimulus to us all in policy thinking.
	So I very much hope that my noble friend will, after all, be willing to accept this amendment, if only to save this Government and future Governments from the pressure and temptation which is always there to fudge and prevaricate and to pretend that there is not a problem until it is a little bit too late and the problem has manifested itself and then there is a political crisis and it is so much more difficult to deal with it. I think that this would make for good government. It would save a very great deal of money. It would also save a great deal of human unhappiness which arises from the consequences of errors of judgment in pensions policy.

Baroness Turner of Camden: My Lords, I am sure that Amendment No. 5 is well intentioned. However, I query whether it is really necessary to have an Independent Pensions Commission when we already have under the new legislation what I imagine is the most powerful regulator that we have ever had.
	My concern is that Amendment No. 5 is grouped with Amendment No. 34, which takes us back to the area we dealt with to some extent when we discussed this issue in Committee. I was very concerned at the proposal in Committee that there should be a commission to look into public sector pensions. One argument was that the recent negotiations undertaken with the unions had led to what was referred to as a two-tier workforce arrangement. I objected to that very strongly. I made the point that public sector pensions arose as a result of negotiations between the appropriate negotiating bodies, including the unions; that the unions regarded their pension entitlement as deferred pay; and that there would be considerable objections if it were thought that any attempt was being made to undermine the agreements that had been negotiated, and which continue to form the basis of pension provision in the public sector.
	Nobody can say that our public sector employees, in London in particular, are highly paid. We have great difficulty in attracting people into the public sector in London because of the housing situation. Subsidised housing for firemen, teachers, nurses, and so on has been considered. We really have to look after our public sector workforce. If a view gets around that somehow or other the pension provision of public sector employees is not as secure as they once thought it was because a commission will be considering it, I do not think that that will be popular. I really hope that my noble friend will look at this with some care because I do not think that we want to upset the present arrangements. It would be very unwise to do so.
	Therefore, although I can understand that there are reasonable arguments for Amendment No. 5, I can think of none at all for the amendment grouped with it, Amendment No. 34, which of course will automatically follow if by any chance we were to accept Amendment No. 5. I ask my noble friend to consider very carefully what I have said. This is a political as well as an economic issue, and it is a very important one. I therefore hope that he will listen carefully to my plea to keep in place the arrangements we have with the unions. That means that individuals in the public sector have a contractual entitlement to what has been negotiated for them. I hope that they are not given the impression that this can be in any way less secure than it is at present.

Lord Skelmersdale: My Lords, perhaps I may say to the noble Baroness, Lady Turner, that although we are debating these two amendments together, there is no linkage between them. Therefore, if the first amendment is passed, it does not automatically mean that the second one will also be passed.

Baroness Howe of Idlicote: My Lords, I am particularly grateful to hear that. I am certainly in favour of the idea of the Independent Pensions Commission but would be a little alarmed if it were to be linked with the other amendment. In looking at these very serious issues we need to keep an eye on exactly what is happening, particularly how trends are developing in private pensions, savings, life expectancy and the average retirement age.
	I like the idea of an independent commission. I stress "independent", as the last thing we want is yet more politicians; or even more important, yet more regulators. We need a flow of independent information which can be acted on. As we all know, anything to do with pensions is difficult. Changes tend to build up problems for whoever is in government, so inevitably they tend to be put off for as long as humanly possible. Therefore, an independent commission which came out regularly with some really important facts and figures would be a help. I support the amendment and I hope that the Minister can agree to it.

Lord MacGregor of Pulham Market: My Lords, I too wish to support Amendment No. 5. I suspect that Amendment No. 4 will be subsumed under Amendment No. 5, which covers much of the same area although on a different timescale. I am sorry that I was not able to be present at the previous debate in Committee to talk on this subject but I should like to say a few words now.
	For those of us who have been following pensions closely, the past 10 years have seen the most phenomenal changes. There have been a remarkable number of short-term changes with considerable impact, many of which were unpredicted at the time; and, of course, the speed of the changes and the volatility also strike one.
	On the deficits of private sector pension defined benefit schemes, there are any number of analyses going on about exactly how they will change—and change quite quickly, with interest rates changes and things of that sort, and changes in the long-term bond yields. There is still a considerable lack of understanding of those kinds of changes among many people who follow pensions and who are affected by pensions. Indeed, I have long wondered—I have spoken on this in the House before—whether we have the right way of assessing liabilities in looking at deficits because they can change so remarkably quickly in a short space of time, and yet the size of the deficit for an individual company can have a major impact on what that company is doing in a given year.
	I was struck by how the Pensions Commission was able to bring together so much information which has been of great benefit to all of us who are interested in pensions. I do not just mean policy makers; I think that that is so for employers and many others. We have a lot of available information from all sorts of other sources—the NAPF, the ABI and so on—but the advantage of an overall authoritative and well researched and well resourced analysis seems to me to be so much better.
	I think that the commission is different from the Monetary Policy Committee, a matter mentioned briefly by the noble Lord, Lord Oakeshott. As I understand it, and hope, the body will gather analyses and trends and monitor all those sorts of things, which will help policy-makers to reach conclusions. It will not have, as the Monetary Policy Committee has, the independent ability to make decisions which affect us all. So I think that there is a distinction in that case.
	Amendment No. 5 covers the crucial points. We could add one or two, but latest trends will probably enable them to be covered. I have to say to the noble Baroness, Lady Turner, that the words,
	"the terms, benefits and affordability of public sector pensions",
	are simply to illuminate public debate. They will not lead to any policy decisions, but there are a considerable number of analyses of the overall impact of public sector pensions on long-term costs and they vary considerably from time to time. I think that an authoritative look at this subject from time to time is terribly important. The noble Baroness must know that there is great concern among many private sector employers and pensioners about what has happened with public sector pensions and private sector pensions and the enormous changes over the past few years. An independent analysis will help proper public debate about that.
	As for the latest trends in private pension savings, there seems now to be general agreement that defined benefits are on the way out, at least for new employees, and that defined contribution schemes will replace them. Four years from now, we may see unforeseen consequences of those changes. I do not know, but it is possible, and an independent analysis could help there. As for the latest trends in life expectancy, there is no doubt that what has taken so many of us by surprise is the increase in longevity by so much in recent years. Again, an authoritative independent analysis would help.
	On the latest trend in private pension savings, I am a chairman of pension fund trustees. One is struck by the number of advisers that one has, often with different advice from actuaries, lawyers, investment management consultants, and the rest. Again, the Turner commission helped many of those who were first getting involved in becoming pension trustees to understand the issues. I think that an independent commission would do the same.
	Finally, if the review demonstrated that average retirement ages were rising, as we all expect from various employment and social trends, I hope that that will accelerate the argument for bringing forward the dates laid down for the increase in the state pension age. Those are all issues that are left to be decided by others, but would greatly illuminate what is happening at present and help to make better decisions.

Lord Turnbull: My Lords, I regret to have to differ with the noble Baroness, Lady Turner, as I share one of the concerns that underlies the amendment: that public sector pension provision is riddled with faults and should be reviewed. The patchwork of schemes that make up public sector provision share a number of characteristics: mostly direct benefit, mostly final salary, mostly, but not exclusively, unfunded, and with longevity risk and investment risk largely borne by the employer.
	Why are those arrangements, in my view, not fit for purpose? First, they are poorly adapted to a world in which we are living longer, working longer and moving jobs more often. Indeed, we are actively encouraging people to move within and across public sector boundaries. For example, final salary schemes do not cope well in a world—which we will see more of—in which people are happy to work beyond 60 but often in a less taxing and less well paid job than they once had at the peak of their career.
	Secondly, the cost of unfunded schemes is deeply untransparent and provides poor incentives to act speedily to correct problems. Thirdly, there is no mechanism systematically to link pension age to life expectancy, so over time, those schemes become more and more expensive. When I joined the Civil Service Pension Scheme in 1970, on average, men would expect to draw the pension for 17 years. They are now expected to draw the pension for 27 years. The extra 10 years has been entirely free; contributions to that scheme have not changed over that period.
	Fourthly, the schemes distort the total remuneration package in the public sector. Too much is going into deferred pay, where no performance conditions can be attached, and too little into current pay and bonuses. Deferred pay is not much help to you in trying to get a mortgage to buy a house in London.
	Above all, these schemes are deeply unfair and arbitrary. They are unfair to millions of taxpayers who no longer have access to DB final salary employer-guaranteed schemes, but who have to pay for those who enjoy such arrangements. Two-thirds of employees are now outside such schemes.
	They are unfair between long-stayers and early leavers. I confess that I am a beneficiary of that unfairness. They are also unfair between junior and senior staff, because the junior staff have a higher turnover.
	They are unfair between existing and late joiners. When you add up what for two people earning the same money who have the same performance and get the same pay increase has been added to their notional pension pot, you find a difference of thousands and thousands of pounds.
	They are unfair between existing and future staff. I give the example of two brothers. One has joined the Civil Service. He has a retirement age of 60. His younger brother joins in three years' time. He will have a retirement age of 65. In 40 years' time, they will be wondering how on earth that difference came about and how it can still be justified.
	It is also unfair between those in public sector-funded schemes, such as local government, where there are pressures to keep contributions and benefits in line, and those in unfunded schemes, where the pressures are less or even non-existent.
	One of my last acts as head of the Home Civil Service was to propose a move from final salary to career average, which is still within the category of defined benefit, and a rise in the pension age for new joiners and for the future service of existing staff, after a transitional period. The hope was that that would be followed by other public sector schemes. It was deeply regrettable that the now Secretary of State for Health, no doubt under instruction, swept all that under the carpet so that it did not become an election issue.
	We cannot allow that to continue. The leaders of public service unions are being shortsighted in not addressing the issue. Thirty years ago, there was a groundswell of resentment about inflation-proofed pensions in the public sector and Ministers seriously considered whether they should do something about it. Fortunately, increasing control over inflation and the arrival of indexed bonds defused the issue, but the inequity of pension schemes will not go away so easily. Rather than allow resentment to build up, with the risk of precipitate action by some future Government, it would be better to plan for changes now in which greater control over the cost of pensions is traded for more pay, bonuses and performance pay.
	Assigning that task to a reconstituted pensions commission would be a welcome start. It could sort out fact from fiction and begin to build consensus. The final task assigned to it concerns trends in mortality and longevity. That is not exclusively the work of actuaries. It involves a whole host of disciplines. You have to understand how society is working and how migration is working. It is not an advanced form of mathematics, so a broadly based pensions commission is a better place to locate work of that kind.

Lord Turner of Ecchinswell: My Lords, I should like to say some words in support of both amendments. The idea of an Independent Pensions Commission returning on a periodic basis or perhaps being a standing commission that reported periodically was one that the Pensions Commission supported and was in our recommendations.
	We made those recommendations very wary of the idea that once a commission gets to the end, it should propose that there is another commission to replace it. Frankly, we thought that we had done a reasonable job and that our proposals made good sense in themselves. We did not necessarily believe that a whole load of extra work needed to be done immediately to take it forward. But we were very aware that things change. If they do not change dramatically in four years, they will certainly change dramatically in 10 years, and over time.
	For instance, our estimates of life expectancy have been transformed dramatically over the past 10 years. When we started our work in 2003, estimates of life expectancy for a man aged 65 had changed by about four years in the previous 10 years. In 1993, the Government Actuary's Department said that in 2003, a man aged 65 had a life expectancy of 15 years, but when we looked at it, it said that it was 19 years. That figure is rising, and it could rise quite rapidly. We could get dramatic changes in medical science where we see either a slowdown in the pace of life expectancy on which we are presently planning or very major accelerations. We need a process to ensure that, quite separate from the pressures of government—the pressures that necessarily push Governments at any one time to suggest that things are under control and are okay—someone is looking independently at an area where the facts could change but also where the implication of those facts lies far in the future. We in this country—this has been a good development in the government of our country—are heading towards increasingly identifying a number of areas of public policy where there is value in having a permanent independent commission or permanent independent authority.
	The noble Lord, Lord MacGregor, has pointed out that the analogy with the Monetary Policy Committee is not precise, because that committee actually pulls the policy levers rather than simply provides advice, but it is similar in that the argument for the independence of the Bank of England and its control of the pursuit of an inflation target are based on the fact that the detriment of bad inflationary control tends to lie far in the future, so that if it is left without independence and is simply under the control of the Chancellor of the Exchequer, there is a tendency, as we have known for decades, to favour the short-term benefit of low interest rates over the long-term benefit of low inflation. That is why the present Prime Minister, in a very bold and very appropriate step, moved to the independence of the Bank of England in 1997.
	That is not remotely equivalent to this, because there is no intention that this independent commission pulls the levers, but it is similar in the sense that we are dealing with pension policies that have been a problem for many years because the benefits of good pension policy lie very far in the future. This is a policy matter that relates to an intergenerational equity between people today and people far in the future, and it is not easy to get the right answers entirely within the framework of adversarial party politics. The noble Lord, Lord Oakeshott, referred earlier to the fact that, when he initially took over the pensions brief, he was aware, as I am sure are most people who consider this issue, that the state pension age would have to be increased, but that he was somewhat reticent about mentioning it. That reticence was pretty much total at 11 am on 30 November 2005 when I presented the Pensions Commission's report. Not one of our three major political parties was committed to an increase in the state pension age. We said that it had better go up, and, by that evening's news, all three major political parties had said that it was a rather sensible idea. There is sometimes a role for an independent view that is completely separate from party politics.
	We in this country are slowly heading towards defining areas of policy where such commissions have a role. The independence of the Bank of England is one such area. Indeed, it is a very extreme case in that it actually pulls the policy levers. Another one, to which my noble friend Lord Howarth has already referred, is a proposal in the new draft Climate Change Bill for an independent committee to hold the Government to account on the progress made towards achieving the emission reduction targets required for climate change mitigation. Again, that places a deliberate external discipline on short-term politics to ensure that the long term is given sufficient focus. That was the argument used by the Pensions Commission. We thought that pensions and the challenges of longevity fell into that category of problem and that there was an appropriate role either for a standing commission that reported periodically or for a commission that was pre-set to be reformed every four years. I have nothing against that as an alternative proposal.
	Amendment No. 34 relates to issues which I said something about in Committee. I should say to the noble Baroness, Lady Turner, that one cannot simply say, "This contract has been formed as part of a negotiation, therefore end of story. No one is allowed to look at its future cost". This is a very particular form of contract. It is not a contract in which someone promises to give their labour in the next six months and receive remuneration in the next six months, but one that purports to set someone's retirement age 40 or 45 years in advance. We do not know its value because we do not know how long that person will live when they get to 2050, given the uncertainty about longevity, which I mentioned earlier. We are promising people who have already joined the Civil Service that they will retire at 60 in 2047 or thereabouts. That has a certain possible value; indeed, it has a very large value, given that by then someone aged 60 may well be expected to live for another 30 years. But it is quite possible that changes in medical science will mean that someone then aged 60 can expect to live for another 35 or 40 years. In that case, we have written a very large, and also blank, cheque to those people through the contract that we have proposed.
	A contract of that nature makes it legitimate for society to look at it occasionally on behalf of taxpayers and to ask whether it is affordable and whether it is fair, relative to other people. After all, that is what we have done in relation to the state pension age. Some people in the workforce today may have believed that they had a categorical promise that they were going to retire on the state pension at 65, or at 60 in the case of women before the reforms that were introduced 15 or 20 years ago. We as a society have said that that promise does not make sense and is not a fair contract between the working population and the retired population, as it would place too much of a burden on future taxpayers.
	Legally, one should respect rights that have already accrued for service that has already been given. However, one cannot treat future service as an agreement that, once made, can never be challenged. In the light of that and the major concerns about the structure of public sector pensions, which the noble Lord, Lord Turnbull, has very effectively expressed, it is important that we continually present the facts about public sector pensions, whether through a commission or reports or by other means, and scrutinise them with an intensity with which the state and private sector pensions have increasingly been scrutinised but which the public sector pensions have escaped.

Lord Skelmersdale: My Lords, is not that exactly the point? The facts are what we do not know and the reason why the Government set up the Turner commission; so that it could establish them and make recommendations thereon. Without the facts, we are rather lost. We pretty much know the facts to which paragraphs (b) and (c) in the noble Lord's amendment relate, but we do not know the terms, benefits and affordability of public sector pensions, to which paragraph (a) refers. That is why I tabled my Amendment No. 34.
	As the noble Lord, Lord Turnbull, just said, public sector pensions are facing the same problems as the private sector. They are both experiencing the same demographic effect. The Bill shows that the Government are quite capable of taking the necessary steps to address the problems, once they have established what the problems are. The pension age needs to be raised, and people need to be encouraged to save more during their working life. At the same time, painful but unavoidable changes are being forced on private sector schemes. Defined contribution schemes are now the norm, with two-thirds of final salary schemes closed to new members.
	We therefore need no new ideas about how to address the public sector pension crisis. What is very necessary, however, is getting the Government to admit that there is a crisis at all. My amendment is a practical alternative to that of the noble Lord, Lord Oakeshott, and—Members all around the House expect me to say this—is a much, much cheaper way in which to achieve this. A Parliamentary Question on the liability of public sector pensions, which my honourable friend Phillip Hammond laid in another place on 15 May, was answered two weeks ago with a blind optimism that completely disregarded independent warnings on the rising costs. The figures finally given by the then Chief Secretary to the Treasury in response are also a year out of date. Exactly the same reply was given on 2 March 2006, 9 January 2006 and, more importantly, 6 December 2005. Talk about obscuration; that just about takes the biscuit.
	The Government claim that the public sector pension liability as at 31 March 2005 was £530 billion. This year's estimation is likely to be £110 billion more, taking the total liability to an enormous £640 billion. If the Minister thinks that that is a high projection, perhaps he would like to give the House a more up to date figure. In fact, independent actuaries think that the total liability is more than £1,000 billion. We simply do not know. The size of the liability is unsurprising. While the Prime Minister as Chancellor of the Exchequer consented to raising the state pension age to 68, as this Bill does, and is continuing his measly financial assistance scheme for private sector workers who have seen their pensions fail thanks to his mismanagement, he has continually failed to impose the same pressures on public sector pension schemes and their contributors. Public sector workers continue to enjoy defined benefit schemes, early retirement ages, generous ill health and death benefits, indexation and lump-sum allowances. There is a reason for this, and I accept exactly what the noble Baroness, Lady Turner, has said: pensions are deferred wages. But until this is pointed out properly, very few people are going to believe it. This is another reason why we should have a report.
	These promises all have cast-iron guarantees via the taxpayer, of course, unlike in the private sector where 60,000 occupational pension schemes have wound up or are in the process of doing so. The same people whose pension schemes have already been raided to the tune of £5 billion a year are being forced to pay yet again. Our amendment would prevent the new Chancellor continuing to fudge the figures and bury the bad news as the old one did. It would mean that no longer would we have to prise out the Government's estimates by means of Parliamentary Questions and that we would not have to wait until it is convenient for the Government to publish the most up to date figures. As I mentioned earlier, we still have not heard what the Government estimation of the liability is this year. The figures for this year have been buried, no doubt until their publication and the unfavourable press coverage that they cannot help but spark, and no doubt until they can no longer threaten to take the gloss off the new Prime Minister's coronation.
	I believe that my amendment would force the Government to face up to the problem that they have played such a large part in creating, and best of all it would happen immediately, unlike the amendment of the noble Lord, Lord Oakeshott, which by definition would take time to accomplish anything.

Lord McKenzie of Luton: My Lords, we have discussed the topics covered by these amendments before, but it has been helpful to range over them again in this debate. As I said previously, our opposition to Amendment No. 5, as with others proposing a permanent pensions commission, is not an attempt to avoid discussion of these important issues and does not reflect any reservations as to the usefulness of a commission in subjecting fundamental issues to rigorous scrutiny in establishing a consensus on the way forward. As I have made clear, we are enormously indebted to the noble Lord, Lord Turner, for the work of his commission. However, that work having been completed, we feel the priority now is to implement the solutions that we have agreed upon.
	We share the noble Lord's concern that the consensus which has been established should be maintained through a transparent review of the assumptions underlying the reform programme. Many of the relevant statistics are already published on a regular basis, including figures on pensioner incomes, savings, life expectancy and demography. The issue still disputed between us is simply whether the transparent debate and resulting consensus that we all seek will be promoted through the establishment of a permanent commission. It is our view that they would not. Moreover, such a body would not come free of charge, although that is not the key point on which we rest our argument. As a matter of interest, the cost of the Pensions Commission was in the order of £1.5 billion.

Lord Fowler: My Lords, £1.5 million.

Lord McKenzie of Luton: I am sorry, my Lords. The figure is £1.5 million.

Lord Turner of Ecchinswell: My Lords, if it was indeed £1.5 billion, I should like to know where my per diems went.

Lord McKenzie of Luton: My Lords, we fear that if we were to set up such a body it would rather act as a destabilising influence, compromising the successful implementation of our reforms and casting doubt on the valuable consensus we have built.
	With respect to the issues on public service pensions raised in both amendments, noble Lords should be aware that the Government are in the process of reforming these schemes to ensure their long-term affordability and sustainability. In order to inform this process, we have been closely monitoring the actual and projected costs of public service schemes on an ongoing basis. We have a number of mechanisms in place to ensure that this assessment remains open and transparent. For example, the Government have regularly published the latest estimate of the total unfunded liability, along with a detailed technical note explaining how this has changed during the preceding financial year, as well as detailing the assumptions underlying the estimate. Copies of the latest estimate and technical note are available in the Library of the House.
	Since 2004, the Government have also published an annual evaluation of the sustainability of projected expenditure on public service pensions in the long-term public finance report. The latest report and projections published by the Treasury in December 2006 demonstrate that annual cash payments are projected to remain completely affordable in the long term, rising gradually to 2 per cent of GDP in 50 years' time. To ensure further transparency, the Government also publish the assumptions on which the long-term public finance report projections for public service pension expenditure are based, and these assumptions are available on the website of the Government Actuary's Department.
	Finally, this Government ensure that individual public service pension schemes are themselves monitored on a regular basis through built-in mechanisms such as the annual Resource Accounts. If noble Lords have not had a chance to peruse them, I would recommend them as a very good read with lots of detailed information on the state of individual schemes. These reports are published on a regular basis and are prepared by professional actuaries based on long-term assumptions that are reviewed and updated in each valuation.
	Given that public service pensions are currently undergoing major scheme reforms, these schemes are entirely affordable and their cost to the taxpayer is rigorously monitored in an open and transparent fashion. I do not believe it is necessary to establish a commission to further review these issues or to undertake a further commitment to publish unfunded pension liabilities.
	Perhaps I may pick up on some of the more detailed points about public sector pensions. I agree with the view taken by my noble friend Lady Turner on this. The Government regard public service pensions as a key part of the remuneration package of public servants aimed at maintaining a high quality public sector workforce. We should share that aspiration. However, like other employers, the Government have to manage the increasing pension costs associated with rising longevity and therefore all major public service pension schemes have been under review since the pensions Green Paper of 2002 and, as a result of those reviews, reforms in these schemes are now well under way. They will fully ensure the long-term sustainability of the schemes. Of course it is right that these matters are kept under review. If issues relating to longevity change dramatically because of medical science or any other reason, it is appropriate for these issues to be revisited.
	Thus far, the following reforms have been achieved. In May 2006, the Teachers' Pension Scheme reached agreement with the teaching unions on a set of reform proposals, and a new scheme has been operating since January 2007. Cost sharing with employees and capping of employer contribution rates form a part of the scheme's regulatory framework. The NHS employers expect to implement new arrangements for the NHS Pension Scheme by 2008, and the Cabinet Office has announced that the new Civil Service scheme will be implemented at the end of this month. Reforms proposed in the NHS, Teachers' and Civil Service pension schemes introduce mechanisms such as cost sharing, which will ensure that any future increases in costs will be shared fairly between employers and employees. In addition, cost capping mechanisms will ensure that there will be an upper limit on the costs to the taxpayer, should costs increase. Reform is also well under way or has been completed in the other public service schemes. The Local Government Pension Scheme announced a series of reforms in November last year, and new arrangements for that scheme are expected to be in place in 2008. New schemes for the Armed Forces, police officers and firefighters have already been introduced.
	Establishing an independent commission to report on the terms, benefits and affordability of public sector pension schemes will change the context of negotiations currently under way and, in doing so, could delay the benefits resulting from these reforms. Public service pension schemes are monitored on a regular basis through built-in mechanisms such as the Resource Accounts as well as scheme valuation reports. Alongside these reviews, the Government have, since 2004, as I have said, set out the financial sustainability of spending on public service pensions in the long-term public finance report.
	We are addressing public sector pension schemes. We have in place arrangements to review assumptions and to take stock of how these reforms will work and progress. We do not need a standing commission to do that. We do not need the proposals in Amendment No. 34 because the data requested there are routinely available to noble Lords.

Lord Fowler: My Lords, before the noble Lord sits down, I understood his argument at the beginning to be that an independent pensions commission would have a destabilising effect on the implementation of his reforms. I think "destabilising" was the word he used. What happens if the department gets it wrong in implementing the reforms he wants, or one part of those reforms? Does he not feel that some form of post-legislative scrutiny would be of help to him? Or is he closing the door on all post-legislative scrutiny?

Lord McKenzie of Luton: My Lords, there is an automatic engagement with the effect of reforms and the review of what is happening, not only through the detailed information that will be routinely published by the DWP and the Treasury but through the work of this House and the other place. This is quite apart from the ongoing engagement that we have with stakeholders and the specific reviews that will be undertaken on the underlying assumptions from time to time. The outcome of the reforms—what is happening in practice—will feature in a range of ways through public expenditure reports and a host of other data. So the suggestion that we eschew any kind of review or recognition that there must be an ongoing engagement to make sure that the reforms we want to see put in place will be effective is not right. We say that we do not need a standing commission to do that. In relation to public sector pensions, given the negotiations that are under way at the moment, the introduction of a commission could slow up the process of getting the benefits we want.

Lord Oakeshott of Seagrove Bay: My Lords, I thank all noble Lords who have spoken. Apart from the Front-Benchers, every speaker was in favour of our amendment. Even the noble Baroness, Lady Turner, was sympathetic to Amendment No. 5. I wish to add two or three minor points of clarification.
	I thank the noble Lord, Lord Howarth, for his support. He did not think the people on the commission should be party nominees. Perhaps I was not very clear on that. I said that on a commission of six or eight people, one should try to ensure that at least one person was clearly identified with each of the three main parties. In talking about the make-up of this House, it may well be, as I hope, that there will be people who are clearly associated with a particular party who also have other expertise to bring to bear.
	I agree with the noble Lord, Lord MacGregor. I did not suggest that the NPC was an exact parallel and I thank the noble Lord, Lord Turner, for taking that argument forward. The proposed commission would not have executive powers. The work of the NPC and its regular publications, which are of enormous benefit, is slightly more the parallel I had in mind.
	Perhaps I might say a tiny word of correction to the noble Lord, Lord Turner. It is not right to say that none of the three parties was talking about putting up the retirement age until the day he came out with his report, and then suddenly they were in favour. I was arguing at some length in our party that we should. Indeed, he will remember from our discussions that we were in favour of a citizen's pension for some time and we made it quite clear that that would be affordable only with an increase in the state pension age. But I thank him for his general support.
	I say to the noble Lord, Lord Skelmersdale, that I find a little difficult his argument that we know the facts. Of course we know the facts now, but we will not know them without a standing commission in five, 10 or 20 years' time. We want to ensure that we have a regular, authoritative, independent view, as did the Turner commission. In a way, the noble Lord, Lord Skelmersdale, made the point against himself. He said the Government are estimating that the public sector deficit is £640 billion but independent actuaries are now estimating that it is more than £1,000 billion. Where does that leave us? That is exactly why we need an independent, authoritative body to come up with a more reliable and well-argued figure.

Lord Skelmersdale: My Lords, if the noble Lord will allow me, I was saying that the figures the Government are publishing—which, presumably, anyone can get hold of—are now so out of date that they are worthless.

Lord Oakeshott of Seagrove Bay: My Lords, I agree. I do not particularly like them, but all we are doing is politically or in other ways bandying figures around. The whole point is that if one has an independent, authoritative commission, it will be much more effective in saying, "No, the Government's figure is wrong", or in coming up with its own figures. That seems a much better forum to do it in than through this kind of political argument. That is the point I am making.

Baroness Turner of Camden: My Lords, I thank the noble Lord for giving way. We have had a variety of pensions bodies—the Occupational Pensions Board on one occasion and then OPRA—but does he really think that an independent commission will develop in a way in which those bodies did not? I was a member of the Occupational Pensions Board for many years but we did not have the powers we needed. Does the noble Lord really think that a new body would be any better than the ones we have had in the past?

Lord Oakeshott of Seagrove Bay: My Lords, that is a different point. I pay tribute to the noble Baroness for her good work over many years on OPRA, but OPRA was essentially a regulator, but a regulator without teeth. This is very different. It is an independent authoritative commission, not a regulator, so I think the parallel is different.
	I thank all noble Lords who have spoken. It will not surprise the House to know that I wish to test its opinion.

On Question, Whether the said amendment (No. 5) shall be agreed to?
	Their Lordships divided: Contents, 73; Not-Contents, 116.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 6 not moved.]

Lord Skelmersdale: moved Amendment No. 7:
	After Clause 13, insert the following new Clause—
	"Report on employment and training of older workers
	The Secretary of State shall lay a report bi-annually before each House of Parliament—
	(a) analysing, by job sector, the number and distribution of people over 50 who are seeking work, and(b) on the provision of training for people over 50."

Lord Skelmersdale: My Lords, I tabled this amendment in Committee but time pressures meant that I was unable to move it. We were able, however, to touch briefly on the difficulties facing older workers, and the noble Baroness, Lady Morgan, did her best to reassure me on this subject in her response to another amendment. However, I feel that it would be useful to debate this amendment more fully, especially as my noble friend Lord Fowler—even if he is not here, I am still talking to him—regretted my decision then.
	My amendment focuses on the effectiveness of the Government's schemes to improve the employment opportunities for older workers. The noble Baroness mentioned some of these schemes in Committee, such as the Age Positive initiative and the New Deal 50 Plus. My noble friend Lord Fowler gave a fairly clear indication that, unfortunately, these were not working. According to the Answer to my Written Question from the National Statistician and Registrar General, the mandate survey, which covers approximately 90 per cent of civil servants in departments and government agencies, revealed that of these employees 585 were aged 65 or over at 1 April 2005. That is around 0.1 per cent of the mandate population, an almost insignificant number, which does not give me an awful lot of confidence.
	Fortunately, the situation in the private sector is rather better. This is perhaps not that surprising, given the proven benefits that older workers contribute to their companies and industries. Some 25 per cent of respondents to an EEF survey in 2004 said that they employed full-time workers over 65, and a third employed part-time workers over 65. However, there is still a long way to go.
	Research from numerous independent organisations, such as the Chartered Management Institute, shows that age discrimination is alive and well. It affects older people's chances of being hired to a new job, receiving promotions and assessing career advice resources. This discrimination impacts even more strongly on women; they are perceived to become an older worker at a younger age than men and so suffer these disadvantages for even more of their working life.
	Can the Minister explain why the public sector is so much worse in this regard than the private sector? She reassured me in Committee that the bar on the DWP appointing those over 65 to public appointments had been lifted. This makes me wonder what other bars remain. Are there any positions in the public sector with an upper age limit? My amendment would ensure greater transparency for government departments as well as for private sector companies and ensure that government initiatives were actually achieving something. At the moment, they appear to do nothing but pay lip service to the principle of employing older workers.
	I turn to the provision of training. The Government apparently understand the importance of education for older workers. The Minister mentioned the Government's commitment to giving older workers access to new skills, yet the money provided to the further education sector is almost entirely targeted at young people. It is not all bad news—there have been some notable successes with the provision of remedial literacy and numeracy classes, but not nearly enough attention has been given to other skills. Can the Minister lay out how much of the further education budget is spent on older workers and say whether the Government intend to increase this amount over the next few years? As I have said many times during the Bill's passage, its success or otherwise will depend on employment at a later and later age. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, this seems a very reasonable request on a very important topic.

Baroness Morgan of Drefelin: My Lords, I thank the noble Lord, Lord Skelmersdale, for giving us the opportunity to discuss the important subject of employment and training opportunities for older workers. There have been significant improvements in the employment rates for older workers in recent years and in the provision to increase state pension age. It is vital that we maintain this momentum and continue to support people in extending their working lives.
	People over 50 are still disadvantaged in the labour market, as the noble Lord pointed out. At 55.2 per cent, the employment rate of 50 to 69 year-olds is still some 19 percentage points behind the overall employment rate for people of working age. That is why we launched Age Positive in 2002—to engage with employers about age discrimination and promote the business benefits of employing a mixed-age workforce. There is much more to do, and we are not complacent about the progress that has been made. That is why last year we introduced legislation to outlaw age discrimination in employment and vocational training and why Jobcentre Plus provides tailored training for older workers through New Deal 50 Plus.
	Paragraph (a) of the amendment would require the Secretary of State to present biannual reports to Parliament regarding the number and distribution of people over 50 who are seeking work. It is vital for us to understand the characteristics of older workers and share this information to understand the support that the Government can give them in seeking and remaining in work. For that reason, the DWP already publishes an older workers statistical information booklet twice a year, a copy of which is in the Library. As my noble friend was recommending publications earlier this evening, I feel that I should recommend that one. It is packed with up-to-date information about the profile of older workers and how training is accessed, along with all sorts of other important information. To tackle the problem, we have to understand it.
	Paragraph (b) of the amendment would require the DWP to produce reports on the provision of training for individuals over 50. I understand that the noble Lord has moved this as a probing amendment to prompt a debate; he has asked a number of questions, which I shall come to. Training and skills are vital to the country's economic growth and productivity. The Government's skills strategies are designed to help to meet the skills challenges of an increasingly competitive world economy, including the challenges posed by an ageing society.
	The provision of training for older workers should be considered within the context of the Leitch review of skills, on which there was a wonderful debate last week. The final report of my noble friend Lord Leitch gave a clear analysis of the future skills needs of the UK. The Government have welcomed the report's ambitions and recommendations and will shortly publish an implementation plan to take forward the Leitch agenda.
	The subject of training was raised on Second Reading by the noble Baroness, Lady Greengross, who is not in her place at present. On that occasion, she commented that,
	"training for work tends to be for people under 40".—[Official Report, 14/05/07; col. 25.]
	The noble Lord made that point as well. While we are aware that this tendency may prevail, we are tackling it directly through legislation to outlaw age discrimination in vocational training and by engaging with employers to challenge discriminatory behaviour. This work is being actively pursued by the Age Positive initiative.
	In encouraging employers to invest in the skills of their workers, we are working to ensure that programmes such as Train to Gain are open to learners of all ages. Train to Gain provides employers with free and subsidised support to train low-skilled workers. The opportunities that this programme supports are available to older workers. As at March 2007, 18 per cent of Train to Gain participants were over 50, which equates to well over 24,000 learners. In addition, for older people returning to work through New Deal 50 Plus, an in-work training grant worth up to £1,500 is available to enable them to access the training that they may need to sustain their move into employment.
	Training provision is available to older workers, but I do not wish to suggest that more could not be done to support older people in remaining in, or returning to, employment. Officials from the DWP and the Department for Innovation, Universities and Skills have worked together to establish a shared evidence base on the role of skills in the labour market and are conducting further research into evidence on the extent to which a lack of access to education or training can be a barrier to older people remaining in, or returning to, the workforce.
	I do not have information on the FE budget in my brief, but I am happy to look into that and write to the noble Lord before Third Reading. He stressed the importance of the DWP's commitment to end the bar on public appointments over the age of 65. I cannot answer his question on that today but, if we are talking about making age discrimination illegal, that is an important point for me to follow up.
	I hope that I have been able to reassure the noble Lord on the points that he made when moving his amendment. A lot of information is available, but we are not complacent about the importance of training for older people, who tend to have lower levels of skills and difficulty accessing the kind of training that may be important if my department is to achieve its target of greater participation in the workforce of older people.

Lord Skelmersdale: My Lords, I am grateful to the Minister for giving a much fuller reply than my activities on the previous occasion allowed her. She spoke about all-age training. That worries me if it means different age groups on the same training course at the same time. Many years ago, I decided that I ought to learn to type, so I went to the local technical college, as it then was, and joined a daytime typing course. I was then 27 or 28 and was surrounded by 18 and 19 year-old women. Needless to say, the net result was that I was so put upon that I was not required, so I was unfairly dismissed from a course that I had paid for. I say that only to illustrate the point that, if mixed sexes and mixed ages are on the same course, there is likely to be trouble and it will not be as effective as it otherwise would be.
	I shall not press the amendment, but what the Minister said is on the record. I shall get back to her as and when necessary—I am afraid that it will become necessary in due course. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 8 not moved.]
	Schedule 1 [State pension: consequential and related amendments]:

Lord McKenzie of Luton: moved Amendment No. 9:
	Schedule 1, page 38, line 40, at end insert—
	"19A In each of paragraphs 5A(3)(a), 6(4)(b) and 6A(2)(b) of that Schedule (calculation of increase to survivor's pension where member's guaranteed minimum pension deferred) omit the words "after it has been reduced by the amount of any increases under section 109 of the Pensions Act"."

Lord McKenzie of Luton: My Lords, I shall speak also to Amendments Nos. 10, 11, 36 and 37. In Committee, I moved an amendment to Clause 14 that I described as covering a complex and technical issue. I do not propose to tax noble Lords' patience by explaining the matter again other than to remind them that I introduced the House to the PUCODI. The amendment was designed to prevent someone from losing out in the event of their scheme converting their guaranteed minimum pension; it would prevent those in receipt of increases to their guaranteed minimum pension at the point of conversion from losing the inflation protection given through increases to the state pension.
	After that amendment was agreed, we realised that it did not cover a specific group: widows, widowers and surviving civil partners of scheme members who had had their GMPs converted before they died. This amendment corrects that oversight and allows that group to inherit those increases, as they do now. However, while working on it, we also discovered that a reference in the legislation governing such inheritance—Schedule 5 to the Social Security Contributions and Benefits Act—has the unintentional effect of requiring a double deduction in respect of scheme indexation from the amount payable to those survivors. The second part of the amendment will remove that. The other amendments are needed simply to tidy up various references in the light of these changes.
	I must apologise to noble Lords for asking them to make such amendments. My only excuse is that this is a very complicated area and the legislation is particularly dense. We intend in the longer term to look again at the whole area in detail to see whether it can be simplified, a result that I assure your Lordships would be much welcomed by anyone who has needed to look at this legislation. I beg to move.

On Question, amendment agreed to.
	Clause 14 [Conversion of guaranteed minimum pensions]:

Lord McKenzie of Luton: moved Amendments Nos. 10 and 11:
	Clause 14, page 19, line 26, leave out from "conversion" to ", and" in line 27
	Clause 14, page 19, line 32, at end insert—
	"(9A) If paragraph 5 of Schedule 5 to the SSCBA (increase of pension for survivor of "S") would apply to a person but for the fact that the scheme of which S was a member was subject to GMP conversion before S's death, the paragraph shall apply to the person (with any necessary modifications) despite that fact.
	(9B) In subsections (8)(c) and (d) and (9A) "GMP conversion" has the meaning given by section 24A of the Pension Schemes Act 1993 (c. 48) inserted by subsection (3) above."
	On Question, amendments agreed to.

Baroness Noakes: moved Amendment No. 12:
	After Clause 14, insert the following new Clause—
	"Review and alteration of reduced rates of contribution
	(1) Section 42 of the Pension Schemes Act 1993 (c. 48) is amended as follows.
	(2) In subsection (1)—
	(a) in paragraph (a), at the end of sub-paragraph (ii) insert "together with his recommendation as to whether there should be an alteration in either or both of those percentages and if so what alteration is required";(b) omit paragraph (b).
	(3) For subsection (3) substitute—
	"(3) If the Secretary of State lays a report under subsection (1) in which the Government Actuary or the Deputy Government Actuary recommends that there should be an alteration in either or both of the percentages mentioned in section 41(1A) and (1B), the Secretary of State shall prepare and lay before each House of Parliament with the report the draft of an order making that alteration; and if the draft is approved by resolution of each House the Secretary of State shall make the order in the form of the draft."."

Baroness Noakes: My Lords, the amendment would insert a new clause after Clause 14. It would amend Section 42 of the Pension Schemes Act 1993 and remove the Government's power to over-ride the recommendation of the Government Actuary when setting the level of the contracted-out rebate for defined benefit schemes.
	At present, the Government Actuary has to provide a report on the cost of providing actuarially equivalent benefits when schemes are contracted out. Since the Government Actuary is the Government's expert on actuarial equivalence, that is not surprising. What is surprising is the fact that the Government can then ignore the Government Actuary's advice: they can choose not to change the rebate or reduce it at will.
	If the Government decide that there should be no change, that is an end to the matter. Parliament has no say whatever. If they decide to make a change, they have to make an order subject to the affirmative procedure, which, as we know, means a little bit of parliamentary procedure but not very much.
	The Minister will be aware that the previous quinquennial review resulted in an order last year that ignored the Government Actuary's advice. The Government Actuary said that the rebate should be increased from 5.1 per cent to 5.8 per cent, but the Government instead increased it to only 5.3 per cent. At the time, the Minister tried to argue two things. The first was that it was cost neutral, which it plainly was not, because the cost to employers of providing the relevant pension benefits in effect went up. If the Government will not pay the actuarial price for transferring liabilities, it is clear that employers will have to make up the difference. Secondly, the Minister ran the argument that, as the Government were considering the results of the review of the Pensions Commission, it was not right to implement the Government Actuary's advice. We found that quite confusing, but it is now clear that they have stopped considering the Pensions Commission's report and have separately decided not to review the contracted-out rebate at an interval shorter than the five-year maximum. We can therefore comprehensively ignore that second argument.
	The real reason for the Government's decision has been admitted only very recently. When we debated the amendment in Committee on 4 June, the Minister said that the Government did not want to remove,
	"Ministers' ability to determine the level of the rebate ... having regard to the prevailing and anticipated fiscal situation".—[Official Report, 4/6/07; col. 1014.]
	We always suspected that, but it is now official. If the Chancellor's coffers look a bit empty, he can have another go at destabilising the funding of private sector pensions. It is a mini-version of the ACT raid and, like that raid, it goes on year after year.
	This is not good government. If we want companies to take responsibility for good occupational pensions, the rules of the game have to be clear and fair. Fairness dictates that if employers assume some of the responsibility of the state for a part of an individual's pension, the companies should be adequately compensated. That is what actuarial equivalence is all about. Employers take long-term decisions about pension provision and its funding and they should not be messed about by the Government's short-term funding decisions. My amendment would install the presumption that the expert advice of the Government Actuary is to be followed. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, this is a significant amendment, which we support. The Government should not keep a dog and bark themselves.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness for this amendment. We had a preliminary discussion on this matter in Committee and I am happy to revisit it. I apologise in advance for repeating some of the information that I gave on that occasion, but that is because, unsurprisingly, the facts remain the same.
	This amendment seeks to impose an additional and explicit requirement on the Government Actuary. If accepted, it would shift much of the responsibility for recommending to Parliament the level of rebate rates for contracted-out salary-related schemes from the Secretary of State to the Government Actuary.
	I will begin with the rebate rates themselves and the decisions taken at the last rebate review. The timing of the review meant taking decisions ahead of the Government's response to the Pensions Commission's major proposals on the future of contracting out. The Government Actuary's considerations, if accepted in full, would have resulted in a significant increase in the overall cost of rebates from April 2007. I can assure the House that we thought very carefully about whether this would have been the right thing to do. As part of that, we took into account existing fiscal circumstances, as was only right and proper.
	The rebate rates that we set for the previous quinquennium of 2002-07 represented a significant increase in rebates for all forms of contracting out—around an additional £10 billion over the quinquennium. However, over the same period there was no increase to contracting out in defined benefit schemes, or indeed to the numbers of people who were members of those schemes. While we accept, therefore, that the rebate is important to schemes, it is clear that it is only one of many factors affecting them. We do not agree with any assertions that the level of the rebate should be held responsible for scheme closure or employer insolvency. Indeed, "a mini-raid" was the phrase used, I think, which I reject, as I reject the continuing challenge on the so-called ACT raid. We have been over that many times and know the arguments.
	Taking all this into consideration when we were reviewing rebate rates in 2006, we decided that it would be sensible to adopt a cautious approach, which we estimated would broadly maintain the level of expenditure at that time. We have always said that we would keep the timing of the next review of rebate rates under consideration. The next five-year review of rebate rates is due in 2012 and, although we do not anticipate that the rebate rates from 2007 will have a significant impact on defined benefit pension provision, it remains an option to bring the next review forward if we think it appropriate. I point out that the Government still expect to spend around £50 billion in rebates over the next five years. That is a considerable amount.
	I now move on to the process by which the rebate rates are set; I hope that it will be helpful if I explain this briefly. Legislation ensures that the level of the rebate is reviewed and subjected to parliamentary scrutiny at least once every five years. The Secretary of State is required to lay before each House of Parliament a report that includes a statement about any changes that he considers are needed to the existing rebate rates. The report takes account of the accompanying Government Actuary's report to Parliament. This amendment seeks to extend the statutory responsibilities of the Government Actuary and would bind Ministers to accept his recommendation. Currently, the Government Actuary's statutory responsibility is to provide an independent report to Parliament on his assessment of the cost of providing benefits of an actuarial value equivalent to that of the state benefits forgone by those who are contracted out. This report is confined to actuarial matters, appropriate to the Government Actuary's role.
	The Government Actuary's report is prepared after full public consultation and due consideration of the responses to that consultation. As with all advice from civil servants, Ministers are obliged to give fair consideration and due weight to this informed and impartial report to Parliament. It is, however, for Ministers to take decisions on the level of the rebate, in the light of other relevant considerations and advice. That is rightly the case, given the expenditure involved. It would therefore be inappropriate to fetter ministerial decision-making by removing Ministers' ability to determine the level of the rebate in light of the broader public policy context and having regard to the prevailing and anticipated fiscal situation.

Lord Oakeshott of Seagrove Bay: My Lords, the Minister said that it was for Ministers to take decisions in the light of other advice. What other advice do they receive apart from that which we are seeing here?

Lord McKenzie of Luton: My Lords, I imagine that they have a range of advice. I was not the Minister involved at that time and I am happy to get back on this, but part of it would be the fiscal backdrop, the general economic situation and what was happening generally to pensions. A whole range of data would be available to the Minister. The Government Actuary could not be expected to take a view on such matters on behalf of the Government of the day and, indeed, it would not be reasonable to expect the Government Actuary to do so.
	I hope that that helps the noble Baroness—although I suspect not—and that she might just feel able to withdraw the amendment.

Baroness Noakes: My Lords, the Minister will get no better response from me today than he got last time, which was that I was not one jot convinced by what he said. He has confirmed that the Government now think that fiscal circumstances are at least as important as actuarial equivalence, but the whole basis of contracting out is on—

Lord McKenzie of Luton: My Lords, I do not believe that I said that. I said that the fiscal backdrop is clearly one consideration that needs to be taken into account. I did not mention equal importance at all.

Baroness Noakes: My Lords, the only consideration that the Government could have taken into account to arrive at their decision last time was a fiscal one. I have certainly not heard any other reason adduced. I went through the arguments that the noble Lord, Lord Hunt of Kings Heath, gave us when we debated the order, and the issue of fiscal circumstances was the new information that the Minister gave us when we debated this in Committee.
	The point is that employers take on one part of the state GMP liability and, under the scheme, they are remunerated on an actuarial basis, not on a basis that suits the Government from time to time. Of course, employers are making these decisions about whether they are contracted in or contracted out not on a quinquennial basis but on a much longer-term basis. The truth is that the Government are using the rebate as yet another stealth tax, because it is one of those things that they can get away with—extracting more money from employers without appearing to take it overtly.
	We are not at all convinced by this. It is a very big issue, which we shall need to look at again at some stage. I shall not take it forward this evening, but the Minister should be in no doubt that we are far from convinced that the Government are correct in their approach and that they are acting honourably in relation to those schemes that have been contracted out. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Morgan of Drefelin: My Lords, I beg to move that consideration on Report be now adjourned. In moving the Motion, I suggest that the Report stage begin again not before 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.

Supreme Court

Lord Lloyd of Berwick: asked Her Majesty's Government what progress they are making in moving the Supreme Court to the Middlesex Guildhall.
	My Lords, your Lordships will have noticed that the noble Baroness, Lady Ashton, was due to reply to this short debate, but since she has been called to higher things, I am very pleased that her place has been taken by the noble Lord, Lord Hunt of Kings Heath.
	It is not my purpose to go over old ground tonight. In the short time available I shall concentrate on one single issue. For better or worse, Parliament has decided that we should have a Supreme Court. I accept that decision although I did not, and do not, agree with it. Parliament has also decided that the present Law Lords, who will be the first members of the Supreme Court, should no longer be entitled to take part in legislative business of this House. I accept that decision too, although again I do not agree with it. What I do not accept, and what I ask the House to consider tonight, is whether in order to achieve those two ends, whether laudable or not, it is necessary to move the new Supreme Court into the Middlesex Guildhall. That is the question I raise.
	The principal reason for doing so is that it would symbolise,
	"the separation of powers between the judiciary and legislature".—[Official Report, 14/6/07; col. WS 125.]
	That is a direct quotation from the most recent Written Statement dated 14 June this year. The second reason given is that it would breathe new life into a fine historic building. I am all for cleaning up the Middlesex Guildhall, which has been allowed to become disgracefully drab and dingy both inside and out, due no doubt to a shortage of money, but when that task has been completed I see no reason at all why the Crown Courts should not return to the Guildhall where they have been for the past 100 years.
	I come now to what it will all cost. We did not have the full costs when we debated these matters in 2005, but now that the contract has been let we are told that the total cost of setting up the Supreme Court in the Guildhall will be £57 million. However, the Ministry of Justice does not have £57 million to hand, so most of that cost will be met on what I might call the "never never" system. Thus the contractor's costs of £36 million will be met by leasing the Guildhall to the contractor and then entering into a sub-lease under which the Ministry of Justice will pay rent of £2.1 million a year for 30 years, increasing at a rate of 2.5 per cent per annum.
	That may seem an odd set-up for our prestigious new Supreme Court, but there it is. However, it is not the end of it. The great bulk of the £2.1 million which will be required annually will be met not out of the existing resources of the Ministry of Justice but by increasing the fees payable by civil litigants in the lower courts. That cannot be right. Why should litigants in the lower courts pay for the new Supreme Court? Of what conceivable interest is it to them?
	Looking at costs the other way round, the cost of servicing the Law Lords where they are at present is very modest indeed. The additional cost of moving them to the Guildhall was estimated in 2004 at £5.2 million a year. It is now estimated at £9.7 million a year—nearly double, and far in excess of the current cost.
	So far I have mentioned only the cost of setting up the Supreme Court in the Guildhall, but there is also the cost of creating seven new courtrooms to replace those which were used daily in the Guildhall until March this year. The plan was to create seven new courtrooms somewhere in the centre of London. That is where they are needed, especially since Knightsbridge Crown Court no longer exists. As I understood it, that was the plan in 2005, but it is now proposed to build five new courts at Isleworth—six new courts less one old court which has to be demolished—at a cost of £18.2 million. However, Isleworth is nowhere near the centre of London and is not where new courts are needed. The total cost of this whole unnecessary operation will be £75 million—£57 million plus £18 million—and all to symbolise, as we have been told, the physical separation of the Supreme Court from the legislature. I emphasise the word "symbolise".
	These are very large sums of money, and no doubt they will be a great deal larger by the time the final bill is paid, for any good that will ensue. However, they must also be looked at in the context of the economies that are currently being forced on the Courts Service—economies which I believe are unprecedented. On the previous occasion that we discussed these matters, the noble Viscount, Lord Bledisloe, mentioned that magistrates face cuts of 3.5 per cent in each of the next three years. However, that is only the tip of the iceberg. The Courts Service as a whole has suffered a cutback of 5.4 or 5.6 per cent in the current year. No doubt that cut will be even greater next year when the Ministry of Justice has to find money for prisons as well as funding the black hole in legal aid.
	In the face of these severe and painful cutbacks, what must ordinary people who work in the Courts Service think when they read that £75 million is being spent on moving the Law Lords to the Guildhall, where, incidentally, they will perform exactly the same function as they do in the Palace of Westminster? They will surely regard it as a complete waste of public money which could be much better spent elsewhere. What is to be done? As we all know, the Ministry of Justice is under new management. I hope that it will be less concerned with symbolism and more concerned with value for money.
	The Government could have the Supreme Court they want, exactly as they want it, tomorrow if only they would abandon the idea of moving it to the Guildhall. It would require only a very simple amendment to Section 148 of the Constitutional Reform Act, and Part 3 creating the Supreme Court could be brought into force now instead of having to wait until October 2009. Surely that would be symbolism enough. It is not too late for the Ministry of Justice to take that course and I urge it to do so. If we are serious about value for money, it is the only sensible course. Then, when the necessary refurbishment of the Guildhall is complete, at comparatively little cost, the Crown Courts could return to the Guildhall where they belong and the Law Lords could remain as the new Supreme Court where they are—here in the Palace of Westminster.

Lord Howe of Aberavon: My Lords, I am delighted to have the opportunity to follow the noble and learned Lord's presentation of this case and to make the point that, quite apart from the extravagance involved, which he described so well, the more one looks at it, the more one realises that the theoretical purpose underlying this change has no foundation whatever and that the consequences of it will be damaging to the independence of the Supreme Court, when the opposite was the objective of the exercise.
	The concept of the separation of powers, from which all this started, does not recognise that the real power which needs to be separated from the others is that of the Executive. For the most part the judiciary and the legislature work in a close partnership. The legislature is, of course, acknowledged to have the supremacy—the judiciary acknowledges that—but the judiciary has its own independence. As I say, they work in partnership. The trouble comes when the Executive's influence is extended in either direction.
	For example, one thinks about the change in the method of appointing judges to the High Court. Although it embraces one solid and sensible thing; namely, the establishment of an Appointments Commission and machinery of that kind, the ultimate political authority over it—there has to be some; it is there in the statute—has passed from the Lord Chancellor, whom we now see is becoming symbolic in name rather like the Chancellor of the Duchy of Lancaster, to a non-lawyer outside this House. That, if anything, diminishes the fraternity between the head of the judicial system, supervising the old system of appointment, and replaces it by a politically accountable authority. There is no sense in that. It is not only in that respect that the change is being made. If one looks at the financing as well, that has much the same effect.
	I digress for a second because I detect a similar lack of respect for the values of integrity and independence in the decisions being taken about the Attorney-General. The decision that the Attorney-General is no longer to determine whether prosecutions should be brought puts that in the hands of a perfectly respectable but non-accountable official within the Civil Service system—or several of them. The Attorney-General is no longer a Member of the Commons and no longer going to accept this responsibility, and moreover, if symbolism is relevant, in the days long ago when I was a law officer myself, the Law Officers Department, although small in numbers, was a department lodged in the Royal Courts of Justice, manifestly linked to the judicial arm of the constitution. Now its name has changed—it is now the Attorney-General's Office. It sits alongside Scotland Yard. All the efforts made in other jurisdictions to separate the police court from the police station are being taken in the wrong direction by the transformation of the Law Officers Department—a body with some sounding authority—into the Attorney-General's Office next to Scotland Yard. It is a symbol of the way in which these things are being allowed to go in the wrong direction.
	As the noble and learned Lord has pointed out, the expense is enormous and is already ravaging the budgets of the court system and doing nothing to improve the performance of the Supreme Court. If one looks at the way in which our present Supreme Court is financed, so far as I can discover its total budget, apart from the judicial salaries, administered as it is by this House, is about £200,000. It has been administered well, within that framework, for a very long time. Moreover, Resource Accounts for 2005-06 says:
	"The House of Lords is outside HM Treasury's administration costs control regime".
	I know that for myself because, when I first went to the Treasury, I tried to impose cash limits on this House and was rebuffed by the noble Lord, Lord Barnett. Then when I was wearing the other hat, as Leader of the House, I was able to rebuff a similar onslaught by the then Chancellor, Sir John Major as he now is.
	We have sacrificed independence of the Executive, both in financing and in the overall appointment of members of the Supreme Court, when we need have done none of those things and could well have remained—even under the legislation—as the noble and learned Lord has said, with the Supreme Court still functioning in this building with a separate, independent entrance. It is a case that I argued when we were looking at the so-called Constitutional Reform Bill. Why not have a separate entrance with as much aggrandisement as you like? You could have a very splendid special entrance for a good deal less than £50 million and the Supreme Court would remain functioning, manifestly and symbolically independent of this House. That would do at least something to mitigate the damage in the substance of the relationship, which I have tried to describe.

Lord Goodhart: My Lords, the noble and learned Lord, Lord Lloyd of Berwick, has returned us to an important issue. As I expected, his purpose is not just to get the information requested by his Question, which could have been obtained by tabling a Question for Written Answer, but to suggest that the Supreme Court should remain in the Palace of Westminster. I thought he might go further and suggest that the Supreme Court should not be brought into existence at all, but he has gone only half way there.
	The noble and learned Lord and I have been involved in many debates in your Lordships' House. He and I, on many of these issues—for example, terrorism—are comrades in arms. On others, and I am afraid this is one, we find ourselves as opponents.
	I have always thought that it was absurd that the highest court in the land was technically a committee of your Lordships' House. That issue is not being raised again today, though perhaps we have come close to it. But the noble and learned Lord says that he accepts that decision. To keep the Supreme Court in the Palace of Westminster would be an entirely unsatisfactory halfway house. So long as the Supreme Court is perching in the Palace of Westminster, it will be seen as part of your Lordships' House. It will still use perhaps a Committee Room, perhaps the Lord Chancellor's old Room—certainly something that is a traditional part of the Palace of Westminster—for its hearings.
	It will still have offices in the Palace of Westminster, or in one of the adjoining buildings in Millbank or elsewhere that belong to the House of Lords. It will still, in that capacity, be seen as an offshoot of your Lordships' House. But future justices of the Supreme Court, under the Constitutional Reform Act, will not be Members of your Lordships' House. They will not have a right to sit in this Chamber or to speak here, though no doubt they will have the right to use the refreshment facilities. They will in effect be strangers in their own building, and I do not believe you can have a Supreme Court with the proper authority that it should have if it has no building of its own, no courtrooms and no proper facilities for the judges.
	Let me look briefly at the question of the conversion of the Middlesex Guildhall. The location is ideal—it is in the heart of the historic centre of government. The building is not ideal—I am not an admirer of it as a piece of architecture. Its neo-Gothic style was already out of date when it was built in 1911. It was built for a local authority, Middlesex County Council. Only later did it become a court, so already it has had one fundamental change of use. The internal fittings, while interesting, are not of great merit. But I think it is capable of conversion into something that would be a more than adequate home for the Supreme Court.
	It is certainly much better than what the Law Lords have now. The Committee Room, as a court, has very little space for observers or indeed for lawyers. The Law Lords themselves have tiny rooms on the second floor. The refurbishment of the Middlesex Guildhall and providing accommodation for the courts displaced by its transfer to the Supreme Court will indeed cost money—quite substantial money. But is this country so poor that we cannot provide proper accommodation for our Supreme Court? Surely we do not want a Supreme Court stuck in an archaic rut in the Palace of Westminster. The Supreme Court needs to be a proper Supreme Court, with its own building, not an adjunct of your Lordships' House, and of course the Supreme Court needs to be properly housed and with the proper facilities, which I believe it will get in the Middlesex Guildhall.

Lord Norton of Louth: My Lords, I am grateful to the noble and learned Lord, Lord Lloyd of Berwick, for raising this Question. I wish to raise two concerns relating to the relationship of the courts to the citizen, and the relationship of the courts to the Executive.
	When the Constitutional Reform Bill was going through your Lordships' House, the Government justified the need for a new Supreme Court on the grounds that the citizen could not distinguish between the House of Lords in its judicial capacity and the House of Lords in its legislative capacity. The justification was to do with perception, not with the delivery of justice. However, when I asked for empirical evidence to support the Government's claim, none was forthcoming. As I argued at the time, we thus proceeded on the Government's perception of the views of the ordinary citizen—in other words, the perception of a perception.
	Given the extent to which the Government are prepared to rely on popular perception, perhaps the Minister could tell us what he thinks popular perception will be of the cost of the delivery of justice once the new building is complete. I refer not only to the £57 million set-up costs but also to the running costs. Can he confirm the point made by the noble and learned Lord, Lord Lloyd of Berwick, that the running costs will be met from fees paid by litigants? I am not so much concerned with the actual amounts involved, but simply with the principle and how this will be viewed by the public.
	I turn to the relationship between the courts and the Executive. Moving the Law Lords across Parliament Square may be a relatively easy move in a physical sense but it is a potentially damaging one politically. Recent years have seen a notable clash between the Executive and the courts. Successive Home Secretaries have attacked court judgements. Following the Belmarsh case, Jack Straw claimed that the Law Lords were "simply wrong" to imply that detainees were being held arbitrarily. Even Prime Minister Tony Blair involved himself, declaring in August 2005 that,
	"the rules of the game are changing".
	The extent of Ministers' attacks led the Lord Chief Justice to defend the judges, stressing that they were doing their job of applying the law and enforcing the rule of law. As he told the Constitution Committee of this House,
	"it is the law that has changed".
	The relationship between the Executive and the courts has become increasingly strained. My fear is that moving the Law Lords out of the Palace of Westminster will leave them much more isolated. Having them within this House provides some degree of protection. Members of your Lordships' House have some appreciation of the role and significance of the Appellate Committee. The Law Lords gain some understanding of the parliamentary process, which is important in allowing some margin of appreciation for that process. Being within your Lordships' House provides something of a protective shield against the Executive. Once the Law Lords move across Parliament Square, they become isolated. Over time, this House will have less awareness of who they are and what they do. They will potentially be out on a much greater limb politically than is presently the case. Given the tensions between the Executive and the judiciary, this is arguably the worst time to be making such a move.
	And why make such a move? It is, as I say, because of perceptions. If everything is in the name, why not, as the noble and learned Lord said, confine the change to one of name alone? Why does the Supreme Court have to exist outside the Palace of Westminster? I note, in response to the noble Lord, Lord Goodhart, that we would not be the first western country in history to have a supreme court sitting in the same building as the legislature. Leaving the Law Lords where they are, but changing the name of the court, would deal with the problems of perception, cost and political isolation. Given that, would there not be a case for leaving the Middlesex Guildhall as it is and leaving the Law Lords where they are?

Lord Hope of Craighead: My Lords, I thought it appropriate that one of those who is to work in the building that we are discussing should contribute to this debate. My qualification for doing so is that for the past three years I have been chairman of a Law Lords' sub-committee, of which the other members are my noble and learned friends Lady Hale of Richmond and Lord Mance. We have been working with civil servants on the implementation programme team on the plans for the building and on a large variety of other matters that need to be attended to in connection with the creation of the new court.
	As I am sure your Lordships will appreciate, this is a very detailed and time-consuming exercise. We have monthly committee meetings with the programme team. Each of us, as well as a number of other Law Lords, has individual tasks which are required to be dealt with separately. I pay tribute to the contributions that all my colleagues are making to this work and especially to the Principal Clerk in the Judicial Office, who bears an even greater burden and contributes many hours of his own time to the enterprise.
	We are, of course, wholly committed to the project which has been set before us. Our main aim in the short term is to achieve a transfer of the business of the House's Appellate Committee to the new court as seamlessly as possible. But we are determined also to ensure that the new court will be accommodated and resourced in a manner that fits its status as the country's Supreme Court.
	In welcoming the Minister to his new responsibilities, I confess that I feel a bit like a baby who, having been abandoned in his pram by one parent, has found another. The noble and learned Lord, Lord Falconer of Thoroton, whose project this truly was, after all, has left us. He was deeply interested in its success and his door was always open when there were problems that needed to be discussed at his level—as indeed there were from time to time. I hope that this will continue to be the case with the Minister and the Lord Chancellor in another place. The project is not without its problems. We need your help and your support.
	There are three problems in particular that I should mention. The first relates to timetable. The plan is that the Supreme Court should commence its operations on 1 October 2009, but the timetable is already very tight and there may be delays. I wish to stress that we cannot be expected to move into a building that is not yet fit for purpose—that is not proper, as the noble Lord, Lord Goodhart, mentioned, for a Supreme Court, and that is incomplete. There must be no shortcuts and no undue pressure just to meet the timetable. I stress that this is not to suit our own wishes. It is essential if we are to give the public the service that they require.
	The second point relates to staff; it is the other side of the coin referred to by the noble Lord, Lord Goodhart. The key to a seamless and successful transfer lies in our staff's experience and in their commitment and loyalty to the project. But the implications for them of transferring to the Civil Service from employment here in the Palace of Westminster are very serious. That subject has not been addressed in this House so far as I can recall. The new court will be a tiny enterprise in the context of the Ministry of Justice as a whole, and unless some weighting is given in recognition of the court's importance in matters such as grading, this will have adverse consequences. The grading which our staff will receive under current Civil Service rules is well below the equivalent in this building. This means a standstill on salary increases for several years for those who choose to move. The conditions of service, too, are much less attractive. I am not convinced that enough has been done to address this problem. We may need some political muscle to address it.
	The third matter relates to finance, the point raised by the noble and learned Lord, Lord Howe of Aberavon. The funding arrangements for the new court are novel and complex and, in important respects, are still unknown. There is no doubt that the court's removal from the protective umbrella of Parliament will expose it to the risk of undue pressure on its funding, and on its resources generally, by the Executive. The Executive will have to bear part—perhaps a substantial part—of the running costs, due to the nature of the business that we conduct. This is not a criticism of the present Government, but we cannot predict the future. Safeguards absent from the Act must be put in place. Progress cannot be made until the identities are known of the first President of the Court and of the chief executive. I hope that the Minister can give us his assurance that this vital matter will receive his attention, and that of the Lord Chancellor, in discussion with those individuals once that stage is reached.

Lord Thomas of Gresford: My Lords, it is my privilege from these Benches also to welcome the noble Lord, Lord Hunt, to his new position. I am sure that we shall be in discussion on many issues. I have always been impressed by his grasp of whatever brief he has taken up, and I am particularly impressed by the principles he courageously displayed in taking an adverse position to that of the Government at a later date. We have a real champion there; I am sure that he will fulfil some of the aspirations of the noble and learned Lord, Lord Hope, in terms of fighting for funds and so on.
	The noble Lord, Lord Norton, referred to the increasing conflict between the Executive and the courts; he said that relations were increasingly strained. I agree. The tension has increased for two reasons. First, there have been unprecedented attacks on the judiciary by Ministers—one has only to think of some of the comments aimed at decisions of judges. Those comments were ill informed and would in a previous age have been regarded as outrageous. The second cause of strain is from the increasing use of judicial review, which has required the Executive to have to explain themselves and their decisions to judges. Adverse decisions by those judges always seem to be taken very hard by the Ministers concerned.
	The noble Lord, Lord Norton, thought that a move to the new building across the road would make the court more isolated. I should prefer to say that it will make it more independent. It will be seen to be much more independent of the Executive than if we continued with the arrangements in this House. That independence has been demonstrated in ways that I applaud. The noble and learned Lord, Lord Howe, does not applaud them but I think that it is very good to have the appointments of judges taken away from politicians and the Lord Chancellor, who had a political role, and put in the hands of a commission. I was pleased that the Prime Minister announced yesterday that any remaining link with political appointments will be removed. I also welcome yesterday's Statement about the position of the Attorney-General. It is wrong to regard the Attorney-General's role as it has been exhibited in recent years at least as the final apotheosis of that position. In recent years, the essential conflict between a person who advises the Government and acts independently in the public interest has been only too clearly demonstrated. I am glad that independence of the judiciary and the legal system are on the agenda.
	It is said that it is only a question of perceptions—that it is symbolic—to move across the road. One of the fine buildings in Washington is the Supreme Court; that symbolises the importance of the judiciary. In Australia, the High Court is in a wonderful modern building that demonstrates its independence of the executive in a very real way. Those are federal systems. It is significant that the Supreme Court will take over devolution issues from the Judicial Committee of the Privy Council. In dealing with devolution issues, there may well be conflicts between the Welsh Assembly, the Scottish Parliament, the Northern Ireland Parliament and this Parliament in Westminster. It is surely appropriate that conflicts of that nature should be decided in a completely different building that symbolises independence.
	I disagree with the method of funding in the Government's proposals. It is astonishing that civil litigants are required to pay through increased fees for such a building. What has the ordinary run of civil litigation got to do with the numerous cases that come before the House of Lords? Civil cases must be a fairly small percentage; I would only be guessing if I gave a figure. So much of the business of the Judicial Committee—devolution issues, issues concerning criminal matters and so on—are nothing to do with civil litigation, yet the system is apparently designed so that it is paid for in that way.
	We have heard of the practical problems from the noble and learned Lord, Lord Hope, and we know that there is a long way to go before the building is complete. I look forward to it and I hope that we have a building of which we are proud, and a building of which we are as proud as we are of our independent judiciary and of the Lords of Appeal, who are the apotheosis of that system.

Baroness Seccombe: My Lords, it is my pleasure to welcome the noble Lord, Lord Hunt, to his new position. He comes from an area in which he had huge expertise. I wish him well as he accepts this new challenge.
	I thank the noble and learned Lord, Lord Lloyd of Berwick, for bringing this issue before us. I am sure that some noble Lords will understand it if I do so with the greatest sadness. Whenever I hear the noble and learned Lord—or the noble and learned Lord, Lord Hope of Craighead—I am struck by how very much this House will lose when it loses the wisdom of the Law Lords and former Law Lords, as the creators of this unnecessary court want. I hope that retired Law Lords will still come here after they have left the Supreme Court but they must all come or none must come. We cannot have just some selected; otherwise, the taint of political inducement or favouritism would touch an institution that is beyond reproach. What is government policy on peerages for former Law Lords?
	We are to have the Supreme Court, so the builders are moving in. A wonderful courthouse is about to be dismembered at great expense—£57 million, as we have heard. Did no one appreciate that we already have a Supreme Court and that it operates effectively within this place and could continue to do so? Any perceived conflict is resolved by the practice of Law Lords not entering into debate on controversial topics and not sitting in relation to areas in which they had expressed a view—a view formalised by the Bingham declaration.
	To rip the Law Lords and the Lord Chancellor out of this place on a whim, as Mr Blair so deplorably did, with eager support from those selfsame Liberal Democrats who now prate about concern for judicial independence, was a folly. It was opposed by at least half of the Law Lords, much of the senior judiciary and, to his lasting credit, the noble and learned Lord, Lord Irvine of Lairg, the former Lord Chancellor.
	It is no offence to the noble Lord, Lord Hunt, if I say how sad it is that there is no Lord Chancellor, graced with all the immense legal authority and influence that that office used to command, to respond to this debate. Many noble Lords would once have found that unbelievable. A fine old mess we now find ourselves in, as the noble and learned Lord, Lord Lloyd of Berwick, has shown, with the costs of what will become known as Falconer Towers soaring.
	The Supreme Court was conceived in haste and some are now, it seems, repenting at leisure. Many will remember the then Lord Chief Justice coming to this House and telling us that he was fully satisfied with the so-called concordat that would protect judicial independence in the new framework set up by the Constitutional Reform Act. Some now find it predictable that the court came into being with fears and doubts about judicial independence and funding in future.
	Mr Straw is a measured man but he will not be there for ever. The judiciary has potentially been delivered trussed and bound into the hands of a career politician on the make in another place. No expensive new courthouse will protect the judiciary from that. Even if there are no second thoughts about expelling judges from membership of this House, could we—I hope that, with his readiness to look again at Mr Blair's constitutional mistakes, the new Prime Minister will consider this—allow the Law Lords to continue to work here as they have done for so long? The noble and learned Lord has suggested that, and how sensible it seems. There would be no tying of the hands of a future Parliament; no destruction of a historic treasure of Victorian Gothic; no loss of court rooms in London that need to be replaced; no diversion of resources from other hard-pressed areas of the legal system; and a saving of taxpayers' money that could be far better spent.
	If the Government truly are a changed Government, they must be ready to think again. Either all those who leave the Supreme Court must come here or none must, as I said earlier. Can the Minister assure us that the future of the judiciary will be safe and that the new Prime Minister will certainly think again on what has been proposed so far?

Lord Hunt of Kings Heath: My Lords, I thank noble Lords for welcoming me to my first appearance at the Dispatch Box speaking on behalf of the Ministry of Justice. I thank the noble Lord, Lord Thomas of Gresford, and the noble Baroness, Lady Seccombe, for their warm words of welcome and I thank the noble and learned Lord, Lord Lloyd, who has allowed us to debate an undoubtedly important matter, for his welcome, too. In my first debate, it is somewhat daunting for me to discuss the Supreme Court with noble Lords.
	Of course, the Law Lords are widely admired throughout the world. They stand at the pinnacle of our legal system. They are renowned for their robust impartiality, independence and intellectual rigour. I say at once from these Benches that the Government are absolutely determined that their translation into a Supreme Court should go as smoothly as possible, that their enduring characteristics should be carried forward and that the facilities at Middlesex Guildhall should be supportive of the Supreme Court, all those who come before it and, more generally, the wider public.
	In this debate, we have reprised a number of important matters that noble Lords have discussed over the past year or so. I shall comment on one or two of those matters before turning to the substance of the question posed by the noble and learned Lord, Lord Lloyd.
	Whether the Lord Chancellor could be a member of the House of Commons was extensively debated. It is worth reminding noble Lords that that matter was debated during the passage of the Constitutional Reform Act and that Parliament agreed that the Prime Minister should be entitled to appoint the best person for the job, whether that person sits in the Commons or the Lords. I well remember listening to some of the debates when it was suggested that a person of very junior rank might be appointed and that the role of the Ministry of Justice, or the Department for Constitutional Affairs as was, would somehow be subordinate to other government departments. My right honourable friend the Prime Minister, in appointing my right honourable friend Mr Jack Straw, has surely signalled the Government's recognition that the Ministry of Justice is indeed a very important department of state. I have no doubt whatever that my right honourable friend Mr Jack Straw, who was appointed as Lord Chancellor on 28 June, recognises well the robust nature of the independence of the judiciary and will ensure that that independence is continued for good. I am sure that he will bring that important characteristic to the post.
	The noble Baroness, Lady Seccombe, will know that there has been discussion on whether members of the Supreme Court could be Members of the House of Lords in the future. The White Paper on Lords reform, published in February 2007, recommended offering every retiring justice of the Supreme Court a seat in the House of Lords. The noble Baroness will know that discussions continue on Lords reform and that my right honourable friend the Prime Minister signalled in a Statement to Parliament yesterday our intention to make further progress in that area. The membership of retiring justices of the Supreme Court needs to be seen in that context.
	The noble and learned Lords, Lord Lloyd and Lord Howe, and the noble Lord, Lord Norton, expressed considerable doubts about the philosophy of the creation of a Supreme Court. That has been debated and disposed of and I do not want to go over old ground, but we consider that, as the noble Lord, Lord Goodhart, said, the creation of the Supreme Court will achieve three main objectives: a clear separation between the judiciary and the legislature; improved access to the highest court of the land; and the renovation of a significant, but rather dilapidated, building. We believe that locating the apex of the judicial system away from the Houses of Parliament, yet right in the heart of the capital, will both symbolise its separation from the legislature and reiterate its national and international importance.
	As the noble Lord, Lord Goodhart, put it, the practical issues of a suitable building cannot simply be brushed aside. Yesterday, I spent a happy time sitting in a hearing of the Law Lords upstairs in the Committee Room. I then went across to Middlesex Guildhall to look at the building. The hearings of the Law Lords in your Lordships' House are enormously impressive for a lay person like me. Who could not admire the rigour of the questioning or the debate and who could not be impressed by the stature of Law Lords sitting in that Committee Room? However, I sat on a very hard bench for 20 minutes; the room was very congested; the facilities for counsel are very limited; and for members of the public the access is very difficult indeed. I could not spy a cafe or a refreshment area. Although that might be seen to be secondary to the quality of the decisions made by the Law Lords, none the less the Supreme Court of this land deserves to be housed in adequate facilities.
	I agree with the noble Lord, Lord Goodhart, that Middlesex Guildhall is an interesting building, although it is not a fine building. Walking round it, as a former local authority councillor, I thought that it reflected its municipal basis and foundation. Nevertheless, having seen the designs and having met the builders, I am convinced that the sensitive approach that has been taken will enable a modest but acceptable building to be provided in which the Supreme Court can do its job effectively.
	I pay tribute to the many organisations—Westminster City Council, English Heritage and the designers—who have clearly put a considerable amount of time and energy into ensuring that a sympathetic design is produced. It is clear that the—I shall not call it "renovation"—modernisation programme that took place in the 1980s in Middlesex Guildhall was typical of much modernisation in that rather disappointing decade as regards design and architecture. The work taking place will restore some parts of the Guildhall to its original glory. It may not be as glorious as one might have hoped but, in many ways, the work being undertaken will enhance Middlesex Guildhall rather than detract from its history.
	Questions have been raised about the cost of the establishment of the Middlesex Guildhall as the Supreme Court and the running costs, as well as how it is to be paid for. The noble and learned Lord the then Lord Chancellor updated Parliament on progress and costs on 14 June. The headline figures for set-up costs are £56.9 million, including a £36.7 million renovation cost, paid for by an annual lease charge of £2.1 million over 30 years. The noble and learned Lord, Lord Lloyd, questioned the method of payment, but a lease and leaseback route is not unusual. The whole scheme, which is a design and build procurement route, enables much of the risk of the building project to be transferred to the private sector provider.
	Of course, I understand noble Lords questioning whether this is worth the money. It is a lot of money and, clearly, there are other necessary public expenditure services that it could have been spent on, including resources within the legal system. I fully accept that, but surely, in view of the importance of the Supreme Court and its having acceptable facilities to discharge justice, it is not a wasted figure. Of course, we must ensure that we are rigorous in controlling those costs and that the running costs of the Supreme Court are kept within balance, although noble Lords have tonight expressed rather mixed views to me on this. They have expressed concern about the cost, but also concerns about the role of the Executive in the budgeting. We clearly have to ensure—and I am sure that the Supreme Court will want to ensure—that the public have value for money. Equally, it is important that there are sufficient resources to enable the Supreme Court to do its job effectively.
	The noble Lord, Lord Thomas of Gresford, made a number of points about fees, as did other noble Lords. Noble Lords will be aware that the intention is that civil fees for the Supreme Court will be recovered, which is estimated to make up about 50 per cent of the total cost. That will be made up of fees from appellants and a contribution from national jurisdiction. The balance between these two sources has yet to be finalised. We expect the total financial burden on lower court users to be less than 1 per cent of the total cost. The rationale for that contribution is for the Supreme Court to make a contribution to the overall wealth of the law, which is then used by all civil court cases. The Supreme Court clarifies issues of law for future use.
	I say to the noble and learned Lord, Lord Hope, that these are matters for further discussion. He suggested, and I agree with him, that we might await the appointment of the new president and chief executive. I am happy to give him the assurance that, when those persons have been appointed, the Government will be keen to discuss these matters further with them. I thank the noble and learned Lord and his colleagues for the great amount of work that they have undertaken in helping to make this translation as smooth as possible. He paid tribute to my officials, and I am grateful to him for that. In turn, from the briefings that I have had in the past two days, I can tell him that my officials well recognise the huge amount of work that he and his colleagues have put into the preparation for what I am sure will be a successful move when it takes place. He also paid tribute to the noble and learned Lord, Lord Falconer. I am happy to echo that tribute. The door was open to the noble and learned Lord and his colleagues, and I assure him that it remains open. Ministers are happy and eager to discuss on a regular basis any matters of concern that he may have. The timetable is tight, but we are confident that the Supreme Court is on target to open in October 2009 as planned.
	The noble Lord, Lord Norton, referred to the relationship between the Executive and the courts, as did the noble and learned Lord, Lord Howe of Aberavon. The Statement and the White Paper issued by the Government yesterday show a clear intent to ensure that the Executive are as fully accountable to Parliament as possible. I look forward to debating these matters in the future, but the noble Lords' remarks must be seen in the context of the Government's clear and stated intention to ensure that the Executive are properly accountable to Parliament, as they should be.
	In response to the question of the noble Lord, Lord Norton, I have already said that the Government respect the independence of the judiciary and will continue to do so. I do not agree with him that moving the Supreme Court across the road to the Guildhall will in some way isolate the judiciary and undermine that independence. Surely it is the very opposite. Surely the Supreme Court will be more separately identified than the Law Lords are now. It will be more transparent. Through that, it will not invite pressure from the Executive. It will clearly identify to the public the quality and value of the work undertaken by the Law Lords—

Lord Norton of Louth: My Lords, is the Minister saying that the Court of Appeal is independent in a way that the Appellate Committee of this House is not?

Lord Hunt of Kings Heath: My Lords, not at all. I am responding to the noble Lord's point suggesting that moving the Law Lords into the Supreme Court as a separately identified entity will somehow introduce untoward pressure on them. I reject that. I believe that separate identification will enhance the credibility of and public respect for the work of the Supreme Court. I assure noble Lords that the Government are determined to ensure that we have a proper building on time and that the new Supreme Court will enjoy thorough independence from and the respect of the Government, as well as the respect of the public.
	Once again, I thank the noble and learned Lord, Lord Lloyd, for allowing us to discuss this important issue. I am sure that we will take careful note of the many constructive comments made by noble Lords tonight.

Lord Evans of Temple Guiting: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 8.29 to 8.30 pm.]

Pensions Bill

Consideration of amendments on Report resumed.
	Schedule 6 [The Personal Accounts Delivery Authority]:

Baroness Noakes: moved Amendment No. 13:
	Schedule 6, page 66, line 23, leave out "non-executive"

Baroness Noakes: My Lords, I shall also speak to the other amendments in the group. They concern the conflict of interest provisions in paragraph 2 of Schedule 6.
	Paragraph 2 says that the chairman and non-executive members cannot be appointed if they have conflicts of interest, and that the Secretary of State has to keep this under review. My Amendments Nos. 13 to 16 would make paragraph 2 applicable to all directors. If it is appropriate not to appoint a non-executive director because of a conflict of interest, it must surely be inappropriate for an executive director with a conflict of interest to be debarred from appointment.
	The Minister batted this away in Committee, saying that the executive members were public sector employees and hence subject to what she described as,
	"the usual rules on proper conduct that apply to all public sector employees".—[Official Report, 6/6/07; col. 1234.]
	She also said that executive directors have to declare interests in accordance with paragraph 13 of Schedule 6. I regard that as a red herring as the declaration of an interest applies to all directors and the declaration of an interest is something less than a conflict of interest.
	The Minister said that because non-executive directors could have other directorships the issue of conflict of interest could arise, but that this would not arise for executives because they were public sector employees. She seemed to imply that public sector employees would not have other directorships and hence no conflicts of interest. I do not believe that it is axiomatic that a public sector employee can never be a director of something, for example, a non-profit body. If the Minister believes otherwise, will he state the chapter and verse for that? Indeed, will he go further and state how this Bill ensures that any such rules for public sector employees will apply to the employees of the delivery authority? I have looked at the Bill and could find no reference in the schedule or elsewhere to the importation of any such rules, whatever they are.
	More importantly, a conflict of interest will be capable of arising in other ways. In Committee in another place, the Minister cited a member of someone's family running a company which could be affected by the introduction of personal accounts as an example of a conflict of interest. I can see that; but surely that is just as likely to arise for an executive member as it is for a non-executive member because the existence of the activities of the spouse will be unrelated to the status of the director.
	That neatly leads me to Amendment No. 17, which amends sub-paragraph (6) of paragraph 2 so that a conflict of interest is defined as a conflict of interest of a director or a person connected with him. Amendment No. 18 adds a new sub-paragraph after sub-paragraph (6). That imports the definition of connected person from Section 252 of the Companies Act 2006, which the Minister will doubtless recall from the many hours we spent on that Act when it was a Bill. He will be aware that that definition is already being used for the declaration of interest provisions in paragraph 13.
	In Committee, we debated whether the reference to "financial or other interest" was sufficiently clear to pick up all indirect conflicts of interest. The Minister was certain that it was, but I remain unconvinced about that. I remain concerned that while paragraph 13 has a very clear delineation of the extent of indirect interests using the well known Companies Act formula, no such certainty exists for these conflicts of interest which might arise indirectly and fall foul of paragraph 2.
	I hope that the Minister will look more favourably on these amendments than the ones I moved in Committee. I beg to move.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness, Lady Noakes, for tabling these amendments. It gives us a chance to review again the matter she raised in Committee. I do not believe that we are apart in what we believe should be the outcome of these arrangements.
	I understand the noble Baroness's concerns, but I can reassure her that the Government recognise how vital it is that the authority is seen as independent, that it operates with integrity, and that its processes are transparent to help build trust and credibility in personal accounts. We have obviously taken that very seriously when drafting the provisions in the Bill, and, in particular, in relation to the appointment of the non-executive members of the authority.
	The non-executive directors are the custodians of the Government's process. They represent an independent check on the Executive. Part of their role is to ensure that the body, as a whole, is run with probity. In making such appointments, we are therefore following all appropriate guidance, ensuring that candidates declare any conflicts of interest at the earliest possible stage of the recruitment exercise to ensure the independence of the non-executive members. Paragraph 2 of Schedule 6 makes this process very transparent.
	The noble Baroness asked whether there should be one rule for the non-executives and another for the executives. If we accepted her amendments, we could equally ask why there was one rule for the executive members, who were employees of the authority, and another for other employees of the authority.
	The executive members of the authority are public sector employees, working full time for the delivery authority. While it will still be necessary for executives to declare a conflict of interest—indeed, the information pack for candidates makes that very clear—the issue is not the same as that of non-executives. As with all other authority employees, the contract of employment for executives will cover such things as conflicts of interest, and they will need to comply with the authority's code of conduct for staff. That is the mechanism.
	It is also important to remember that the delivery authority will be run in line with the principles of good corporate governance, which includes ensuring that any conflicts of interest are properly declared, considered and recorded. Schedule 6(13) ensures that during all meetings of the authority, anyone who has an interest in any matter to be discussed must declare it, and that the declaration will be recorded. In addition, the authority will be required to have a register of members' interests. Those measures offer reassurance that any interests will be dealt with appropriately by the authority.
	I hope that that has reassured the noble Baroness on that point. Clearly, conflicts of interests must be avoided in relation to executive and non-executive directors alike, but the route to tackle them for executive directors is through contracting arrangements, as for the rest of the employees of the authority.
	Turning to what constitutes a conflict of interest for the purposes of paragraph 2 of Schedule 6, we have defined a conflict of interest in subparagraph (6) as any interest, financial or otherwise,
	"which is likely to affect prejudicially the discharge by him of his functions as a member of the Authority".
	The inclusion of other interests allows a wide range of factors to be taken into account when considering whether a conflict of interest exists. We consider that that would also include circumstances in which a conflict of interest may arise in relation to a person connected with a non-executive. We believe that the description in the Bill automatically encompasses that but goes further.
	Amendments Nos. 17 and 18 specify further what might constitute a conflict of interest for non-executive members. The former dictates that the interest of a person connected with a non-executive can constitute a conflict of interest. The latter refers to Section 252 of the Companies Act 2006 to provide a definition of "connected persons". Although I agree with the spirit of those amendments, which seeks to ensure that the most vigorous criteria are applied when assessing conflicts of interest, the Government's approach achieves that better—or equally. The paragraph will require the delivery authority, in making any future non-executive appointments, to follow the same procedure regarding potential conflicts of interests—under paragraph 2(5). So as it stands, in each case, that could include the interests of a person connected with a non-executive.
	I hope that that explanation will assure the noble Baroness that the existing provisions in the Bill concerning appointments and conflicts of interest are perfectly adequate. I have heard nothing in what she said that suggests that we are seeking a different outcome on this, but I believe that the way that the Bill is drafted is one route to achieving that objective.

Baroness Noakes: My Lords, I thank the Minister for that reply. He is absolutely right to say that there is nothing between us of substance on this; I was probing how it will work in practice.
	I dislike the distinction that the Government have drawn between the executives and non-executives. Normally, when the Government propose structures involving executive and non-executive members of the board, they do so claiming the virtues of the unitary system. The whole idea of the unitary system is that directors, whether they are executive or non-executive, are working on the same terms, in effect—it is just that some work there full-time and some part-time. It is unsatisfactory that the Government have diluted the concept of the unitary board. I have drawn attention to what I think is vague and lacking in clarity; for example, the extent of "other interest" in the Bill. The Minister thinks that it is adequately dealt with; I must let the Government live to rue the day if they have made a mistake in their drafting and not pursue it further today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 14 to 18 not moved.]

Baroness Noakes: moved Amendment No. 19:
	Schedule 6, page 67, line 29, leave out paragraph (d) and insert—
	"(d) is unfit for office by reason of misconduct,"

Baroness Noakes: My Lords, noble Lords will see that the amendment has the support of the noble Lord, Lord McKenzie, so I am very hopeful that it will be accepted by the House.
	In Committee, I raised the question of what the words, "is guilty of misbehaviour", meant. That is one of the grounds for removing a chairman or non-executive from office—although, interestingly, not an executive, but we will not pursue that further. I gave various examples which attracted a certain amount of interest outside your Lordships' House, which I shall not repeat today.
	I then proposed the form of words which the Government proposed in the Statistics and Registration Service Bill, and Amendment No. 19 is a repeat of that amendment. I am delighted that the Minister, who was encouraging in its response in Committee, has joined me in the amendment today. I beg to move.

Lord McKenzie of Luton: My Lords, I am very happy to accept the amendment.

On Question, amendment agreed to.

Lord Lyell: My Lords, I advise the House that if Amendment No. 20 is accepted, I cannot call Amendment No. 21.

Lord McKenzie of Luton: moved Amendment No. 20:
	Schedule 6, page 67, line 37, leave out sub-paragraphs (1) and (2) and insert—
	"(1) The Authority may—
	(a) pay to the chairman and other non-executive members such remuneration, and(b) pay to or in respect of the chairman and other non-executive members such sums by way of or in respect of allowances and gratuities,as the Secretary of State may determine."

Lord McKenzie of Luton: My Lords, I made it clear in Committee that we would look again at the provisions that enable the authority to pay non-executive pensions. The provisions were included originally because the remuneration requirements for delivery authority members had not been finalised, and it was therefore prudent to ensure that the provisions had maximum flexibility while the remuneration proposals were being developed. The existing provisions ensure that the authority can, but does not have to, pay non-executive members sums in respect of pensions. The noble Baroness rightly pointed out in our earlier debates that it is unusual for non-executives to receive pension provision, and the Cabinet Office guidelines in Making and Managing Public Appointments also make it clear that most public appointments are not pensionable. On reflection, we agree with the noble Baroness. Amendments Nos. 20, 22, 24 and 25 therefore remove the provisions for non-executive pensions and tidy up the remaining remuneration provisions.
	In Committee, the noble Baroness also expressed concern about the inclusion of gratuities. Her amendment seeks to remove the provisions that enable gratuities to be paid to non-executive members. We have carefully considered the points that she made, and I am inclined to agree with her that the language sounds a little Victorian. I assure her, however, that we will not be tipping the non-executive members, as she suggested in Committee. The language may seem old-fashioned, but I assure her that the term "allowances and gratuities" is used frequently in legislation for statutory bodies of this kind, such as the Serious Organised Crime Agency in the Serious Organised Crime and Police Act 2005, the Strategic Rail Authority, Natural England, the Pension Protection Fund, the Pensions Regulator, the Commission for Equality and Human Rights, and the Olympic Delivery Authority—also to my surprise. Gratuities in this sense are taken as payments that are not covered by the terms and conditions of the appointment of non-executives. A gratuity might, for example, be a payment for additional work that has not been specified, or it might cover a settlement in respect of actual or prospective legal claims that the office holder may bring against the appointing body on grounds, for example, of personal injury.
	In these circumstances, there is merit in retaining the flexibility for payment of gratuities to non-executives. I hope that the noble Baroness is reassured that we have listened carefully to the points that she has made and that, although we have removed pension provision for non-executives, we seek to retain the provisions for the payment of allowances and gratuities. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, I listened carefully to that explanation. The fact that the word does not mean what most people think it means in a great string of other public bodies is neither here nor there. I was not impressed by that explanation, and I invite the Minister to think a little more carefully about it. "Gratuity" has a very clear meaning in English, and we should stick to the normal meaning when we are making legislation.

Baroness Noakes: My Lords, I agree with the noble Lord, Lord Oakeshott. Many statutes are simply lifted from previous statutes and made according to the Victorian parliamentary draftsman's handbook, which has not been updated to move with the times. The term "gratuity" is extremely old-fashioned. I would have been quite happy to concede previously that it has been used in other legislation.
	I am grateful to the Minister for considering the points that I made in Committee and responding on the pensions issue, which is extremely helpful. I simply suggest that some day someone must get parliamentary draftsmen to use modern language in today's Bills when drafting corporate structures, which have moved on quite considerably from those that parliamentary draftsmen used to create even 10 or 15 years ago. I will not pursue that point today, but the Minister might like to do so. I am grateful to him for tabling the amendment.

On Question, amendment agreed to.
	[Amendment No. 21 not moved.]

Baroness Noakes: moved Amendment No. 22:
	Schedule 6, page 68, line 11, leave out sub-paragraph (4)
	On Question, amendment agreed to.

Baroness Morgan of Drefelin: moved Amendment No. 23:
	Schedule 6, page 68, line 28, leave out sub-paragraph (3) and insert—
	"(3) During any vacancy in the office of chairman, or at any time when the chairman is absent or otherwise unable to act, any of his functions may be discharged by the deputy chairman.
	( ) In discharging any function of the chairman under sub-paragraph (3), the deputy chairman must have regard to any guidance given by the chairman as to the discharge of that function by the deputy chairman."

Baroness Morgan of Drefelin: My Lords, government Amendment No. 23 relates to provisions for the deputy chairman of the delivery authority. In our earlier debates, the noble Baroness, Lady Noakes, questioned the provision that enabled the Secretary of State and the chairman to give directions to the deputy chairman about the discharge of the chairman's duties. It is not our intention to enable the Secretary of State to interfere in, or indeed micromanage, the work of the authority. Rather, the provisions are included as a helpful measure to ensure that the deputy chairman can discharge the functions of the chairman in appropriate cases to ensure the smooth running of the authority. It was envisaged that this may be helpful if, for example, the chairman was incapacitated for some time due to ill health.
	We have considered carefully the concerns of the noble Baroness. I agree with her that these provisions appear a little heavy-handed and could imply that the independence of the delivery authority would be compromised. I wish to reassure her that this was not our intention, so the government amendment removes the ability of the Secretary of State or the chairman to issue directions to the deputy chairman. Instead, provision is made for the deputy chairman to undertake the duties of the chairman only when the chairman be unable to do so, such as when he is on holiday or unwell. We have also added a provision that gives the chairman a discretionary power to issue guidance to the deputy on how the functions should be exercised. The deputy can discharge functions whether or not guidance is issued, but he must have regard to any guidance that has been issued when deciding how to discharge those functions. Any guidance issued by the chairman is to have no effect on whether the deputy can discharge the functions. When the chairman is unable to discharge the functions, the deputy is to be entitled to discharge any of the chairman's functions.
	I hope that the noble Baroness will be able to support the amendment and I beg to move.

Baroness Noakes: My Lords, I am delighted to support the amendment proposed by the noble Baroness.

On Question, amendment agreed to.

Baroness Noakes: moved Amendments Nos. 24 to 25:
	Schedule 6, page 69, line 26, leave out sub-paragraph (4)
	Schedule 6, page 70, line 9, leave out "or a non-executive member"
	On Question, amendments agreed to.

Lord McKenzie of Luton: moved Amendment No. 26:
	Schedule 6, page 74, line 24, leave out paragraph (b) and insert—
	"(b) send a copy of the certified statement and of his report to the Secretary of State as soon as possible.
	( ) The Secretary of State must lay a copy of the statement and report sent under sub-paragraph (5)(b) before Parliament."

Lord McKenzie of Luton: My Lords, as I announced in Committee, the National Audit Office has contacted the Department for Work and Pensions to notify it of a change of policy in relation to the NAO's role in laying audited accounts before Parliament. The Bill makes clear that the delivery authority will be required to produce an annual statement of accounts and that the Comptroller and Auditor General must then audit them. This will not change.
	However, the Bill also states that the Comptroller and Auditor General will then lay a copy of the audited accounts before Parliament. The NAO has brought to our attention that this requirement should no longer be placed on the Comptroller and Auditor General as it is now the policy of each department or audited body to take ownership of publishing accounts and laying them before Parliament. The purpose of this is to move the central government sector into line with the commercial world where it is the responsibility of companies rather than their auditors to file accounts. Government Amendment No. 26 makes this change so that it is the responsibility of the Secretary of State to lay a copy of the audited accounts before Parliament. The change will reflect industry best practice and bring the delivery authority in line with other recently created bodies such as Natural England and the Olympic Delivery Authority, which require the Secretary of State to lay the audited accounts before Parliament. I beg to move.

On Question, amendment agreed to.
	Clause 33 [Initial function of the Authority]:

Baroness Turner of Camden: moved Amendment No. 27:
	Clause 33, page 30, line 9, at end insert—
	"( ) In discharging its function under this section, the Authority shall ensure that its actions and advice support the objective of the scheme under subsection (2)(a) that all investments held for the purposes of the scheme are managed in accordance with what appears to the Authority to be industry best practice relating to the responsibilities of institutional shareholders and their agents in relation to shareholder activism, including any principles governing intervention in an investee company on account of its approach to corporate social responsibility."

Baroness Turner of Camden: My Lords, I shall speak also to Amendment No. 28. The points mentioned in the amendments are designed to ensure that the Personal Accounts Delivery Authority operates in the best interests of members, but without being prescriptive. It is reasonable that these amendments should be made to incorporate these important principles into the scheme and the delivery authority from the outset. It is also important that the points are included now in order that the ability of the potential delivery authority personnel to deliver against such objectives is considered when they are being recruited.
	These amendments seek to ensure that the issues central to the benefit of scheme members are put on to the agenda while quite rightly leaving the delivery authority to decide how to fulfil its responsibilities to members. Moreover, I imagine that it would be uncontroversial to suggest that the investment strategy should be in the best interests of members, that members will be given choice, or that the charges are fair and reasonable.
	There is another important point in favour of the amendments. As we all know because we have discussed it many times, one of the problems is that people are simply not saving enough for pension provision. We all know why this happens; often people are expected to save for pensions at a time in their lives when they have a number of other expenses. Another reason why some people have been reluctant to put money into pension schemes is that in recent years there have been a number of problems with pension provision and a number of scandals. The result has been that trust in pension schemes has, to some extent, been eroded and people are often reluctant to put their money where they do not feel it is going to be safe and secure. The amendments would ensure transparency; that members' interests are paramount; and that when they invest in a personal account scheme they can be confident that their money will be safe and that they are likely not to have any worries about it.
	I hope my noble friend will look with favour on the amendments or, if he does not like the wording, perhaps come back with something different at a later stage of the Bill. I beg to move.

Lord McKenzie of Luton: My Lords, I am grateful to my noble friend for moving Amendment No. 27 and for speaking to Amendment No. 28.

Baroness Noakes: My Lords, the Minister says that to all of them.

Lord McKenzie of Luton: Indeed, my Lords. I always mean it. The amendments concern the investment policy for personal accounts. I will take the two amendments together as they both relate to investment objectives of the Personal Accounts Delivery Authority.
	Amendment No. 27 would require the Personal Accounts Delivery Authority to develop an investment strategy based on industry best practice, in particular in relation to the delivery authority's approach to corporate social responsibility. Amendment No. 28 would require the objectives of personal accounts in relation to investment decisions and charges to be set out in the Bill.
	The December White Paper, Personal accounts: a new way to save, set out a broad overview of the personal accounts scheme objectives, investment expectations and the charging structures. The Government's response to the White Paper consultation published recently set out our intentions for taking forward the policy on these areas.
	It is a requirement of European law that pension schemes must comply with the "prudent person" rule and that investment decisions must be made in the best interests of members and beneficiaries. The personal accounts scheme will be a trust-based occupational pension scheme, run by trustees who will have a duty to comply with European and domestic legislation to manage the scheme in the best interests of members and beneficiaries. We expect that the Personal Accounts Delivery Authority will consider all manner of industry best practice, investment choices and engagement with stakeholders in developing the investment strategy for the scheme.
	I hope my noble friend will agree that it is therefore not appropriate to set out specific objectives for the delivery authority to follow as these would constrain its proper consideration of all investment choices. As I have stated on earlier occasions, our proposed Bill, planned for later this year, will set out the finer detail of personal accounts and the remit of the delivery authority. I can reassure noble Lords that we will have the opportunity at that point to discuss in greater detail the proposed plans for investments and charges. In those circumstances, I hope my noble friend will withdraw the amendment.

Baroness Turner of Camden: My Lords, I thank my noble friend for that comprehensive response. I appreciate that there will be an opportunity at some stage in the future to discuss investment and charges. In those circumstances, we can withdraw the amendments today in the confidence that there will be an opportunity for further discussion if that is necessary. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 28 not moved.]

Baroness Noakes: moved Amendment No. 29:
	After Clause 33, insert the following new Clause—
	"Publication by Secretary of State
	(1) The Secretary of State shall lay before each House of Parliament—
	(a) any relevant proposals about personal accounts within the meaning of section 33;(b) any guidance issued under subsection (6) of section 33.
	(2) The Secretary of State shall publish any matters laid before Parliament in accordance with subsection (1) in such manner as he considers appropriate."

Baroness Noakes: My Lords, the new clause returns to the issue of transparency about the development of the personal accounts scheme. In Committee we debated a series of amendments that sought to delineate the matters the delivery authority had to have in mind as it formulated its advice to the Secretary of State or prepared for implementation. They covered hugely important areas, such as the effects of personal accounts on existing pension provision or the need to avoid the equivalent of mis-selling of personal accounts to people who will not get enough back, or who should use their money on things such as paying off expensive credit. Another example was the amendments just moved by the noble Baroness, Lady Turner of Camden.
	The Minister's answer then—as it was a moment ago—was that all that would be covered by the next Bill and was inappropriate for this Bill. That answer, in effect, means that we may have to wait for a year or more before the next Bill becomes an Act. That is a year or more with no transparency about the crucial tasks the delivery authority will undertake. We may be able to debate the content of the next Bill, but it does not move forward any transparency about what the delivery authority will be working on.
	All we know from the Bill is that the authority can do anything it thinks appropriate in relation to personal accounts but has no other guidance in the Bill. We know that the authority will be concerned with relevant proposals about personal accounts, which the Secretary of State will give them, but there is no provision in the Bill for Parliament, or indeed any other interested stakeholder, to be aware of what those relevant proposals amount to. In addition, the Secretary of State may issue guidance to the authority about the discharge of its function. However, there is no provision for anyone other than the authority to know what is in that guidance. In Committee, the Minister said the guidance could be administrative in nature. If that is the case, I am sure there is no harm in publishing it. The Minister will be aware that the real interest lies not in administrative matters but in the substantive development of personal accounts.
	The Prime Minister has made much in his opening days about the need to restore trust in politics and, by extension, in Government. We agree with that; the past 10 years have left public trust damaged. The Minister must know that obsessive secrecy—doing things behind closed doors and not informing Parliament and others about the development of crucial policies—runs wholly counter to the need to rebuild trust.
	My amendment would require the Secretary of State to lay before each House both the relevant proposals to be worked on by the delivery authority and any guidance issued under Clause 33(7). No parliamentary approval would be required, so the work of the delivery authority would not be held up, but Parliament would be given the opportunity to seek appropriate debates on the issues being passed from the Secretary of State to the delivery authority. The amendment would also require publication as the Secretary of State thought fit. There are many interested parties outside Parliament who also need to be informed, and many of us throughout the course of the Bill have received representations from many such parties representing very diverse interests.
	If the Government are serious about rebuilding trust, let them start today by accepting my amendment. I beg to move.

Lord Oakeshott of Seagrove Bay: My Lords, we on these Benches support the amendment in the interests of transparency—the favourite word of Ministers tonight, I notice. It seems to have overtaken, with a late run, the word "flexibility" in the ministerial briefing stakes.

Baroness Morgan of Drefelin: My Lords, I dare not say that I am grateful to the noble Baroness for tabling the amendment, but I am delighted that we were able to have this discussion now. I hope that I can be flexible with my speaking notes so that I can try to address some of the noble Baroness's concerns, which I appreciate are important.
	I stress that the Government have approached the development of proposals for personal accounts in a very collaborative and consensual way. I strongly believe that that approach is not going to change, and we will continue to work with the network of stakeholders that we have established. We will continue to be open about proposals set out in the White Paper, the consultation and the Government's response. Our approach is to use the documents that are in the public domain and set out the proposals, combining that with the requirements on the delivery authority to produce an annual report and accounts, to have a management statement which is agreed with the DWP and is public, and to have a financial memorandum. These procedures and processes will create a situation in which the transparency required by the noble Baroness can be delivered.
	In Committee, noble Lords indicated that they would return to these topics on Report. The Bill seeks to establish a delivery authority to utilise the knowledge, skills and experience of the private sector to help the Government to understand the commercial and operational implications of policy decisions. In particular, the delivery authority will advise on specific products that comprise a financial, technical and commercial strategy. We want to introduce independent expertise at an early stage to ensure that our proposals are robust and can be implemented successfully.
	As Clause 33 indicates, the delivery authority will, during the initial phase, provide advice on relevant proposals as presented by the Secretary of State. As I have indicated, these proposals, including the December White Paper and the DWP's recent response to the consultation on that paper, are already in the public domain. Furthermore, the debates on the Bill will provide and shape the context within which the authority will work.
	We continue to develop proposals prior to legislating for personal accounts in a proposed second Bill. In doing so, the DWP will utilise the stakeholder networks it has worked hard to establish, maintaining the open and consultative approach we have developed with interested parties. A good example of our collaborative working approach is the seminars we have held in conjunction with the PPI and other organisations. We will continue to listen to and engage with stakeholders as we take forward proposals for personal accounts. We cannot do this without having the level of transparency for which the noble Baroness is calling. We cannot achieve that engagement without working in that way.
	As the delivery authority takes up its role, it, too, will proffer advice on the proposals. But, unlike stakeholders, the authority will do so in an independent capacity and from the perspective of an organisation that will be tasked with creating the infrastructure for the scheme.
	We must bear in mind that in particular, the authority will be considering the design of the infrastructure for the scheme and the preparations for the contracting of services necessary to set it up. To expose the nature of this work, as the amendment suggests, would put the delivery authority at a major disadvantage when it comes to negotiating contracts. Indeed, it would be likely to deter potential suppliers who would be denied confidentiality. I believe that this is one of the key problems with the amendment. This would clearly not be in the interests of the eventual members of the scheme.
	As I have indicated, the primary reason for bringing in independent expertise at this early stage is to advise on the viability of policy proposals and the scheme, including the commercial strategy for service contracts. Guidance is a term which describes one way in which the Secretary of State could communicate with the delivery authority about how it carries out its duties—it is not a method of curtailing the independence of the authority in providing advice on proposals. Much of this guidance will be uncontroversial, such as how the authority could present advice to the Secretary of State. However, the delivery authority will be required to produce an annual report and accounts, which is important in terms of transparency. That public document will include details of the authority's work, the issues it has advised on and the progress it has made towards delivering its remit.
	As I suggested earlier, the authority will also be subject to normal non-departmental public body scrutiny and accountability arrangements. The management statement and the financial memorandum, which will be public documents, will provide a clear operating framework. As I have said, these documents will be agreed with the DWP.
	I fully accept the spirit in which this amendment was tabled. I stress again that we are, and will continue to be, committed to maintaining the consensus that has been our overriding approach in developing our proposals for personal accounts. This will not change once the authority is in place. Our White Paper response document quite clearly indicates our expectation that the delivery authority will act in an open and consultative manner. Indeed, in his foreword to that document, the Secretary of State was unambiguous in stating:
	"The last year has seen tremendous progress in building consensus on a new foundation for long-term savings. We must now go further in deepening that consensus around the details of personal accounts. The coming year could be the most important in getting this right".
	I hope that I have reassured the noble Baroness that, in taking forward proposals for personal accounts, we and the delivery authority will be open and transparent in our proceedings. However, as she will readily appreciate, we must also consider the sensitivities around commercial confidentiality that I mentioned. I hope that the noble Baroness will consider withdrawing her amendment.

Baroness Noakes: My Lords, I thank the Minister for that comprehensive reply and the noble Lord, Lord Oakeshott, for his support for my amendment. If I had not heard the Minister's final sentence, asking me to withdraw the amendment, I might almost have thought that she was agreeing with exactly what I was trying to achieve.
	If the delivery authority is to be as committed to transparency as the Minister would have us believe, why can we not include in the Bill a provision that states that its proposals will be laid before Parliament? I accept that there exists a body of proposals at the moment, but other proposals could arise later, which may or may not be made available.
	Neither of us is interested in the administrative guidance on how to lay out advice to the Secretary of State—that is not important. What is important is the extent to which guidance is given that constrains or affects the way in which the issues are to be developed. The Minister said that commercial confidentiality was the key and that the authority would deliver the design of infrastructure, which was not appropriate to be in the public domain. However, that is not what my amendment dealt with. It dealt with the proposals and the guidance that the Secretary of State gives to the delivery authority. It was not aimed at advice going in the opposite direction to the Secretary of State—we debated that in the context of the Freedom of Information Act amendment in Committee. The amendment is about being open and transparent not just with stakeholders but also, importantly, with Parliament, which does not want to lose sight of the development of the scheme as it progresses.
	The Minister has not addressed the transparency issues that I raised. It is such an important issue that I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 29) shall be agreed to?
	Their Lordships divided: Contents, 30; Not-Contents, 40.

Resolved in the negative, and amendment disagreed to accordingly.
	Clause 35 [Winding up of the Authority]:

Lord McKenzie of Luton: moved Amendment No. 30:
	Clause 35, page 30, line 43, leave out from "State" to end of line 3 on page 31

Lord McKenzie of Luton: My Lords, I shall also speak to Amendments Nos. 31 and 32. Government Amendments Nos. 30, 31 and 32 relate to the provisions for the wind-up of the delivery authority. As I made clear in Committee, Clause 35 is included in the Bill as an act of prudence—we would not wish to pre-empt the will of Parliament by taking for granted its approval of a proposed second pensions Bill.
	Should this second Bill not receive Parliament's support and it became clear to the Secretary of State that the delivery authority was no longer needed, Clause 35 would enable the Secretary of State to wind up the authority. In doing so, any wind-up order could also make provision for the transfer of the authority's property, rights and liabilities.
	As drafted, the Bill enables transfer to the Secretary of State or to "any other person". In Committee, the noble Baroness, Lady Noakes, tabled an amendment that sought to remove "any other person", but we did not debate the point. Nevertheless, in the light of her amendment, I have reflected on the provision and concluded that transfer to "any other person" is not required.
	The delivery authority will be funded by grant in aid throughout its initial stage. In the unlikely event that it was necessary to wind up the authority, it would be appropriate for any property, rights or liabilities to be transferred solely to the Secretary of State. Government Amendment No. 30 therefore removes the provision that would enable these to be transferred to "any other person", and Amendments Nos. 31 and 32 make consequential amendments to tidy up the clause and to reflect this change. I beg to move.

Baroness Noakes: My Lords, perhaps there is no point in having a Committee stage if I just table amendments, not move them and the Government think about them in this way—this is a magic way of getting through a Bill. I thank the Minister for considering my amendment that I did not move in Committee.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 31 and 32:
	Clause 35, page 31, line 4, leave out "or (b)"
	Clause 35, page 31, line 6, leave out "or divided"
	On Question, amendments agreed to.

Baroness Noakes: moved Amendment No. 33:
	After Clause 35, insert the following new Clause—
	"Report to Parliament about costs of Personal Accounts Scheme
	(1) Before the end of the six months beginning with the day on which this Act is passed, the Secretary of State must prepare and lay before Parliament a report setting out his estimate of the public expenditure likely to be incurred on the Personal Accounts Scheme during the ten years beginning with the laying of the report.
	(2) Before the end of every six months beginning with the laying of a report under this section, the Secretary of State must prepare and lay before Parliament a further report setting out his estimate of the public expenditure likely to be incurred on the Personal Accounts Scheme during the ten years beginning with the end of those six months.
	(3) References in this section, in relation to any period of ten years, to the public expenditure likely to be incurred on the Personal Accounts Scheme are references to the expenditure likely to be incurred over that period by the Secretary of State, the Personal Accounts Delivery Authority and any successor body to the Personal Accounts Delivery Authority."

Baroness Noakes: My Lords, the amendment would insert a new clause to require the Secretary of State to publish a report on the costs of the personal accounts scheme every six months. The report would be in the form of a rolling 10-year forecast of public expenditure likely to be incurred. As I explained in Committee, it is modelled on the cost report produced in respect of the identity cards scheme. I explained also in Committee that the amendment was suggested to us by the Association of British Insurers, although we are happy to support it. The cost report on identity cards was a direct result of our similar amendment which won the support of your Lordships' House when we considered the Identity Cards Bill.
	We believe that concerns about large-scale projects in the public sector are so great that mechanisms have to be found to keep these projects subject to public scrutiny during their gestation and implementation. Too many large-scale projects, in particular those involving IT, have gone wrong, have cost too much and have delivered too little, too late. My noble friend Lord Lucas led a debate on this in your Lordships' House a couple of weeks ago, when he laid out the plain fact that the list of failures is very long indeed.
	We cannot rely on the Government volunteering information. That has rarely happened in the past. I remember only too well the struggle to obtain the barest outline of the costs of the Dome until well after the damage had been done. Relying on the National Audit Office to reveal the facts after the event is not good enough. We all want this personal accounts scheme to work and we believe that transparency, which we debated on a previous amendment, is an essential component of keeping progress on the project in public view. We also cannot rely on the Freedom of Information Act to reveal the information. The Government are adept at deploying the various exemptions from disclosure; even when the Information Commissioner finds against them, they have been known to defy him. We cannot rely on the Office of Government Commerce and the gateway reviews, because these are deliberately kept out of the public domain. Indeed, the latest twist involves reports that the Treasury have ordered that copies of the gateway reviews be destroyed after they are undertaken. The Treasury has never believed in transparency.
	In Committee, the Minister said that the funding of the personal accounts scheme is a matter not for this Bill but for the next, but I do not think that that is quite right. The delivery authority's function as set out in Clause 33(1) is to prepare for implementation of personal accounts as well as to advise on the Secretary of State's proposals. The Explanatory Notes to the Bill make it clear at paragraph 91 that,
	"much preliminary work must be done in advance of Royal Assent of the planned second Bill",
	and paragraph 93 states that the delivery authority would,
	"Formulate a commercial strategy for the personal accounts scheme by preparing specific products which comprise a financial, technical and commercial strategy prior to issuing an Invitation to Negotiate".
	The Minister mentioned that in the context of a previous amendment. I hope that he will not tell me that this does not involve detailed costing. If we cannot get information from the delivery authority under this Bill, we must wait for the next Bill. We might well be talking about at least another year before a new Bill becomes law and we do not know whether there will be transparency provisions in that Bill. Certainly there will be an information void as a minimum between now and Royal Assent of the next Bill.
	In Committee, the noble Lord, Lord Oakeshott, asked very reasonably whether the period of six months was too short. To date, there have been two identity cards cost reports, which are six monthly. The initial one contained no surprises, but the second one, which was available in May, showed that the costs had gone up by nearly £1 billion in six months—and no one thinks that it will stop there. Therefore, I am rather inclined to think that six months can be a long time if a project is going out of control in any way and that any longer period would not serve the needs of transparency and accountability. I beg to move.

The Earl of Northesk: My Lords, I support this amendment. My noble friend referred to gateway reviews. I am going to bully the Government with a specific question about that until I am blue in the face. Normally, with gateway reviews the Government claim commercial confidentiality. I signally fail to understand why the traffic-light system of gateway reviews should be subject to commercial confidentiality. That simply tells us—Parliament—whether a particular IT project is subject to a red, green or amber light.

Lord Oakeshott of Seagrove Bay: My Lords, I thank the noble Baroness, Lady Noakes, for remembering my question in Committee. I am afraid that I still feel on balance that six-monthly reports on this project are too frequent. The identity cards project is such uncharted territory, and it is far more complex and far larger than this. Six months is a reasonable period in the ID cards Bill but in this regard it rather smacks of pulling up the plant frequently to see whether it is growing. I am afraid that I do not support the amendment.

Lord McKenzie of Luton: My Lords, noble Lords will be aware, as has been said, that this amendment was debated in Committee. Several points were raised then, from different sides of the Chamber. The noble Baroness, Lady Noakes, justified her need for more reporting because the Government have, she said,
	"a poor record of delivering new IT systems".—[Official Report, 11/6/07; col. 1515.]
	There was also some concern that if the costs of the scheme were to be covered through some form of government subsidy, this would be unfair to existing pension providers. I do not think that that point has been pushed this evening.
	The delivery authority is being set up to engage the necessary expertise to advise on the delivery of personal accounts within a framework set by government. Of course I understand the concerns expressed here today. The Government's track record of delivering on large-scale IT projects has not altogether been a happy one. But it is sometimes easy to forget the track record of the routine work of this department—the DWP ensures that state pensions are paid every week or month to around 10.5 million pensioners in the UK and a further 1 million who live outside the UK.
	In this initial advisory phase, as we have said throughout the consultation on personal accounts, the delivery authority's sole source of financing will be the Department for Work and Pensions, from grant-in-aid. As such, the department will be required to report on its accounts in the usual way. I am not sure that a requirement to report on public expenditure in connection with personal accounts—from the point at which this Bill is passed, and every six months thereafter—would help to ensure that the necessary IT for the personal accounts scheme is delivered. Six months is incredibly frequent; it will be a job-creation scheme for accountants. In this initial phase, the authority will also provide advice and consider proposals on the most effective way to finance the scheme. It has been suggested by some in the industry that any form of government subsidy would distort the market for pension provision. That is not our intention.
	We recognise that the personal accounts scheme should not receive state support—that gives it an unfair competitive advantage over other pension providers. We intend the scheme to be self-financing in the long run through membership charges. However, in the short term, there are likely to be costs arising from a number of activities, such as acquiring the necessary IT and testing it, before the scheme receives any revenue from membership charges.
	Some respondents to our consultation on personal accounts suggested that members,
	"should not bear an unreasonable burden of the start-up costs of the scheme".
	Others were concerned that any taxpayer subsidy would create an imbalance in the market for workplace pensions.
	We are considering a range of funding options for the personal accounts scheme. The optimal financing solution will require balancing our commitment to those who are not covered by existing pension provision—the 7 million who are not saving enough—without adversely impacting on the market for pension provision. We are all well aware of the constraints on the government purse and the need to be accountable to the taxpayer.
	Provisions in Schedule 6 require the delivery authority to report annually on its performance and financial position—a requirement that applies equally to other nondepartmental public bodies. The delivery authority will be required to provide a report to the Secretary of State, certified by the Comptroller and Auditor General, for examination and approval. I see no benefit in adding further burdens to the comprehensive regime of financial accountability that already exists. The income and expenditure, public or private, associated with the personal accounts scheme, beyond the delivery authority's advisory phase, is not a matter for the provisions in the Bill.
	It is our intention to bring forward further information on the funding options we are considering in a subsequent Bill, subject to the will of Parliament. There will be further opportunity for your Lordships to examine that information. I therefore urge that the amendment be withdrawn. This is not an attempt to withhold any information, but if we are asking for six-monthly financial reporting with 10-yearly projections as well as all the other routine reporting that needs to take place, that really is way over the top.
	The noble Lord raised the issue of gateway reviews and their availability. I am not particularly excited on that issue, but I shall look into the matter and perhaps write to him.

Baroness Noakes: My Lords, I thank all noble Lords for taking part. I am sorry that the noble Lord, Lord Oakeshott, thinks that six months is too short. I feel that a 12-month backward-looking report which the Minister said was on offer—an annual report that by definition looks backwards—is nothing like a substitute for keeping an eye on what is going forward. I do not believe that it is a job-creation scheme for accountants, because if the delivery authority is doing its job properly, it will have long-term projections which are constantly kept under review. This is just a matter of transparency, yet again.
	The system needs to be—and we all want it to be—up and running by 2012. There is high potential for it not to be plain sailing. It may not be as complicated as the ID card scheme, but transactionally it may be more complex as it has to cope with enrolments, people changing employment, and people investing in different kinds of funds and changing them over time. Transactionally, it is quite a complex scheme. If it starts to get out of control, it may need more money to fix it, and who will meet that cost? Will the state meet it or will it be a burden on the scheme? Or it may not be delivered, which we do not want. Transparency— keeping a view on how this is developing—is one of the important ways in which one can help it to be delivered. However, I recognise that there is no support for the amendment this evening, which is a great pity because it would have been nice to test how many of the 70 are still in the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 34 not moved.]

Lord Skelmersdale: moved Amendment No. 35:
	Before Clause 36, insert the following new Clause—
	"Occupational pensions—transparency for employees
	(1) Section 8 of the Employment Rights Act 1996 (c. 18) (itemised pay statement) is amended as follows.
	(2) After subsection (2)(b), insert—
	"(ba) cost to the employer of pension contributions made or treated as made in respect of the employee during the period covered by the pay statement,"."

Lord Skelmersdale: My Lords, we have heard much about transparency during the past few hours. The suggestion that occupational pensions information should be given on pay slips is most definitely an aid to transparency. The instructions given to new public speakers are said to include the diktat, "Never begin with an apology". Today I have to break that instruction—on reflection, I believe that I have not inserted this new clause into the correct part of the Bill. The Minister will probably tell me that it should more properly be in Part 2, possibly after Clause 31, but I shall leave him to make that statement in due course.
	Wherever it appears, the amendment would, in a small but significant way, clear the fog of confusion that surrounds pensions. It is designed to make pensions a more significant part of pay packages, something of which the noble Baroness, Lady Turner, must surely approve, given her support for the fact that pensions are deferred wages. That is something that employers can offer to potential employees as a consideration and something that employees continue to note every time they receive their pay slips. In the private sector, companies will be encouraged to offer competitive pensions and employees will appreciate the benefit to them of opting in to company schemes and contributing to their retirement. It will also point up the advantages of the new personal accounts and pay slips will clearly show where the money is going.
	In the public sector, it will also have a positive effect. It is not unusual to hear complaints from civil servants about low wages—indeed, we heard some of them uttered by the noble Lord, Lord Turnbull, earlier today. At the moment, they are able to ignore, and possibly are not even aware of, the valuable pensions that await them—but not their private sector counterparts—upon retirement. With the pension contributions written clearly upon their payslips, employees from both the private and the public sector will be able to make a more informed and accurate assessment of the value of their pay and the rewards they receive for work. My amendment would take little effort to implement and could have a large and positive effect. I hope that the Minister will consider its benefits carefully. I beg to move.

Baroness Turner of Camden: My Lords, I do not disagree with the amendment, and I am sure that the noble Lord, Lord Skelmersdale, would not expect me to. I have a query on the wording,
	"pension contributions made or treated as made".
	I worry about that a bit, because we know of plenty of examples where employees have alleged that they have made contributions but have in fact had contribution holidays and so on. While I would be quite happy if it just said "pension contributions made", I feel a bit dubious about "treated as made".

Lord Oakeshott of Seagrove Bay: My Lords, I congratulate the noble Lord, Lord Skelmersdale, on a novel and original idea, wherever it gets inserted into the Bill.

Lord McKenzie of Luton: My Lords, I would like to thank the noble Lord, Lord Skelmersdale, for tabling this amendment. We share his concern that employees should be given appropriate information about their employer's contribution to their pensions. However, I believe that the current arrangements meet these objectives.
	The Employment Rights Act 1996 entitles employees to receive a written pay statement showing their gross and net pay and itemising all deductions. The purpose of these provisions is to protect employees by ensuring that they know what deductions have been made from their pay and why. They can complain to an employment tribunal if they do not receive a statement, or if all the necessary information has not been given. The tribunal can order the employer to pay compensation if it finds that unnotified deductions have been made. The provisions therefore ensure that employees' pension contributions are shown on their pay statements.
	Employees have to be told when they join, or are considering joining, an occupational pension scheme how the employer's contributions are determined and how the member's contributions are calculated. In addition, members of defined contribution schemes—where the amount of money paid in is intrinsically related to the size of the pension they will get out—have to be told, on an annual basis, the amount of contributions credited to them in the previous year. Members of defined benefit schemes which are subject to the statutory funding requirements can request information on the schedule of contributions that the employer has agreed to pay.
	We feel that this level of information is satisfactory. We must be mindful of the burden on employers of having to re-cast their pay statements unless there is compelling evidence that harm would result from the absence of such a requirement. This may slightly disappoint the noble Lord, but I hope that he accepts the extent to which the basic issue he is pursuing is genuinely covered and feels able to withdraw the amendment.

Lord Skelmersdale: My Lords, I am grateful for the comments of the noble Lord, Lord Oakeshott, and the noble Baroness, Lady Turner. The reason that the words "treated as made" are in the amendment is so that it covers public sector pensions, where the money does not actually get transferred anywhere. It sits in a notional hole and gets paid out at the end of the employment.
	As for the Employment Rights Act 1996, by law the Minister is quite right. You have to have net and gross income put on the monthly, or even weekly, pay sheet. You have to put the deductions, first for tax and, secondly, for national insurance but, as far as I know, for none other purpose. If I am right, there is a very good reason for putting pension contributions on the pay sheet. I will not pursue the argument tonight. However, I would like to talk privately, perhaps to one of the Minister's advisers, about this, as transparency on a weekly or monthly basis is very important. It will help to achieve what we are all trying to do, which is to set up a sensible pension scheme, especially for the lower paid.

Lord McKenzie of Luton: My Lords, before the noble Lord sits down, I understand fully the thrust of where he is coming from. I very much take the point that we should fix a meeting outside the Chamber to see precisely where we are. If we need to do anything different to meet the noble Lord's objectives, we will try to do so.

Lord Skelmersdale: My Lords, I am very grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 38 [Consequential etc. provision, repeals and revocations]:

Lord McKenzie of Luton: moved Amendment No. 36:
	Clause 38, page 32, line 27, leave out "Part" and insert "Parts 2A and"
	On Question, amendment agreed to.
	Schedule 7 [Repeals and revocations]:

Lord McKenzie of Luton: moved Amendment No. 37:
	Schedule 7, page 76, line 42, at end insert—
	"Part 2A Up-rating
	
		
			 Citation Extent of Repeal 
			 Social Security Contributions and Benefits Act 1992 (c. 4) In Schedule 5, in each of paragraphs 5A(3)(a), 6(4)(b) and 6A(2)(b), the words "after it has been reduced by the amount of any increases under section 109 of the Pensions Act". 
		
	
	On Question, amendment agreed to.

Mental Health Bill [HL]

The Bill was returned from the Commons with the amendments agreed to.
	House adjourned at 9.51 pm